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Originally published Thursday, February 23, 2012 at 12:46 AM

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Royal Bank of Scotland losses widen on writedowns

Royal Bank of Scotland, which is majority-owned by the British taxpayer, saw its loss in 2011 swell by 78 percent as it booked large provisions for Greek debt and compensation for buyers of payment protection insurance.

The Associated Press

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LONDON —

Royal Bank of Scotland, which is majority-owned by the British taxpayer, saw its loss in 2011 swell by 78 percent as it booked large provisions for Greek debt and compensation for buyers of payment protection insurance.

The bank, in which the government holds an 82 percent stake, on Thursday reported a worse than expected net loss of 2 billion pounds ($3.1 billion) for 2011, compared with a loss of 1.13 billion pounds the previous year. Income was down 11 percent to 26.6 billion pounds largely on the back of a 25 percent fall in revenue at the global banking and markets division.

Chairman Philip Hampton said "there are no shortcuts" to rebuilding a company saved by a 45.5 billion pounds bailout, the world's most expensive bank rescue.

RBS shares were down 1.6 percent at 26.9 pence on the London Stock Exchange.

Gary Greenberg, analyst at Shore Capital, said the biggest disappointment was the decline in revenues, though he backed RBS' emphasis on rebuilding its balance sheet over profitability as "the correct strategy."

Impairments included 850 million pounds for compensating people who bought payment protection insurance they didn't need, and 1.1 billion pounds for Greek debt. That was offset by a 1.8 billion-pounds gain on the fair value of the bank's own debt.

RBS set aside 785 million pounds for staff bonuses, down 43 percent from 2010.

"We all understand that a company that is making losses at the bottom line tests the patience of those who depend on it," Hampton said.

"However, the restructuring task we have undertaken at RBS is unique in its scale and complexity, and needs to be phased in line with our ability to fund and execute it," he said.

In the fourth quarter, RBS reported a net loss of 1.8 billion pounds, compared to a profit of 1.2 billion pounds in the previous three months. Income was down 6 percent to 5.9 billion pounds.

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