Jan. 28 --The Government's hopes of returning even part of RBS to private hands before the election are hanging by a thread after pounds sterling 3bn in new charges put the bank on course for its largest loss since the crash. The bank detailed a litany of new provisions related to bad behaviour, in a surprise statement released a month before it is due to announce full-year results. Banking analysts said this put the 81pc taxpayer-owned bank on course for a pre-tax loss of around pounds sterling 8bn , its worst plunge into the red since 2008, when it lost a British record pounds sterling 24bn . The bank's executive committee has agreed to forgo any bonuses for the year, in the light of the painful update. 'Fronting up to our past mistakes is expensive, but RBS is now a much stronger bank,' said Ross McEwan . The biggest provision is pounds sterling 1.9bn to cover the cost of litigation, largely related to mortgage-linked securities sold in the run-up to the financial crisis. It also took a pounds sterling 465m charge to pay compensation for mis-selling of PPI, taking its total provisions for the scandal to pounds sterling 3.1bn to date. And it set aside pounds sterling 500m to fund compensate businesses that were wrongly sold interest rate swap hedging products, a mistake that has cost it pounds sterling 1.25bn so far. The new provisions come on top of the pounds sterling 4.5bn charge the bank has already said it will suffer on the cost of writing down the assets it is placing into a 'bad bank'. RBS (down 7.5p to 332.2p) said that eight members of the executive committee would forgo their annual bonus, following the example of McEwan, who has already agreed to forfeit his. Between them, the eight directors were awarded some pounds sterling 6.5m in bonuses last year. McEwan said the multitude of conduct-related charges was due to the bank's rapid expansion into multiple business areas under disgraced former boss Fred Goodwin . 'These [problems] haven't been in the last five years. They spread well before that and we were not focusing our business strongly enough on customer needs.' He said RBS had been 'in far too many markets and product groups'. 'We did run a very big bank and each time these things emerge, we are there.' He also hinted at further charges to come, warning that 'the scale of the bad decisions during that period means that some problems are still just emerging'. Well-placed sources said it was now looking highly unlikely that any of RBS will be sold to private investors before the general election in 2015. Richard Hunter , head of equities at stockbroker Hargreaves Lansdown , agreed. 'Every time we think we have got through one issue another one comes along. It is disappointing, there is no question about it. We really should be in the final furlong by now but there seems to be a long way to go. RBS is significantly behind Lloyds. The prospect of a dividend remains a distant dream which is in stark contrast to Lloyds. Offloading the Government's stake remains some way off.' Investec analyst Ian Gordon said the surprise stock market update would help McEwan clear the decks ahead of full-year results, allowing him to focus on operational performance. 'It's not really a trading update, it's an exercise in dumping the stand-out items into the market ahead of time, so there is one-off negative news,' he said. Chairman Sir Philip Hampton refused to be drawn on the prospects for privatisation saying only that the decision would be 'up to the Government'. He added that RBS would still push the Government to be allowed to pay bonuses worth 200pc of basic salary. 'The ability to pay competitively is fundamental to the prospects of the business getting back to where it needs to be.' ___ (c)2014 Daily Mail (London, ) Visit the Daily Mail (London, ) at www.dailymail.co.uk/home/index.html Distributed by MCT Information Services
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