RBS chairman Philip Hampton said 2010 saw a 'step-change in our overall financial performance', and the bank was keen to draw attention to the fact that it actually made an operating profit of £1.9bn, compared to a £6bn loss in 2009. But it's still paying the price for past mistakes: it had to pay £1.116bn into the Government's Asset Protection Scheme (to cover its dodgiest assets). Without this charge, its net loss would have been relatively small.
On the other hand, things are looking up on that score; the money it lost on bad loans was down by a third to £9.3bn, while it's apparently more than half way through a plan to sell off non-core assets, as it looks to reduce its balance sheet. But it hasn't pulled its lending horns in altogether: it dished out £52bn to businesses in the 11 months, £2bn more than planned, and £15bn to mortgage borrowers, almost twice as much as expected. So there were some positive nuggets in today's door-stopping 13-part results statement (a clear sign that it's embraced some of the Civil Service ethos, at any rate).
As usual, Hester had to fend off criticism about the bank's bonuses, despite the fact they've fallen in real terms (from £1.3bn to £950m) and they'll mostly be paid in shares (the cash element has been capped at £2,000). The RBS boss really is between a rock and a hard place here. As long as the bank is still effectively taxpayer-owned, he’s going to get stick about bonuses – particularly while it’s still loss-making. But the flipside is that it's much harder for him to attract and keep good staff, as he complained today: as long as the bank continues to be a 'political football', it's hardly surprising that top bankers don't fancy it. Is it a coincidence that the investment banking arm has had a slower year?
The point is that despite some positive signs, RBS remains in recovery mode, a work in progress. And that recovery will happen a lot faster with good people on board. Hester doesn't expect the Government to start selling down its stake until September at the earliest, after the banking commission report (and since its shares are still worth less than the Government paid, that's arguably no bad thing). Until that time comes – and assuming we want to get the best possible return on our investment – doesn’t it make sense to stop making his life more difficult?