ROYAL Bank of Scotland is the "least trusted company", chief executive Ross McEwan has admitted, as he launched a £1 billion savings drive to allow a Government share sale as early as 2015.
Mr McEwan said jobs would be cut as he launched a renewed initiative to slim down the bank, focusing it on the UK, and pledged to end practices such as offering short-term "teaser" rates on savings accounts and 0% interest credit card deals.
But the 81% state-owned institution admitted it is not strong enough to return to the private sector and it could take years for taxpayers' shares in RBS to be sold off.
The Edinburgh-based institution announced a pre-tax loss of £8.2bn for 2013 due to restructuring costs and misconduct charges.
RBS's shares plunged xxp or xx% to xxxp, compared to the break-even price of around 500p for the taxpayer's stake.
Mr McEwan said: "We are the least trusted company in the least trusted sector of the economy. That must change."
Seven bank divisions will be cut to three, supported by a new central administrative function.
Mr McEwan also pledged to reduce its cost to income ratio from more than 70% to around 50%.
"This year that will mean cutting around £1bn of operational spending on things that don't help our customers," Mr McEwan said.
He added: "An RBS that is no longer trying to take on the world will not require a back office as big as the one we have today.
"That will mean making very difficult decisions on jobs in the years coming."
Mr McEwan declined to specify how many jobs would be axed, adding that it will depend on business needs.
The bank currently employs 118,600 people, down 4400 on a year ago. Around 12,000 people work for RBS in Scotland.
Some of the reduction is due to 1400 jobs cut at RBS's retail bank, half of them in Scotland, announced by Mr McEwan in May when he ran that business.
Andre Spicer, Professor of Organisational Behaviour at Cass Business School, cautioned: "One big stumbling block is that aggressively cutting costs will alienate employees, which damages customer service quality."
Speaking to an audience of bank staff and customers in East London, Mr McEwan set out plans to simplify RBS's product range.
"Sweeteners and cash payments might encourage people to switch banks but they send a terrible message to loyal customers and to staff about our priorities," he said.
He expressed "shock" at 0% interest credit card balance transfer deals.
"We will not be in the business of trapping people in debts they cannot afford," he said.
RBS chairman Sir Philip Hampton said the overhaul of RBS had to be completed before the Government could sell shares.
"That process I would say is another year or so."
He added: "It is going to take a number of years to exit."
Mr McEwan, who replaced Stephen Hester as chief executive in October, said: "We need to recognise that we are not yet a strong enough bank that can be privatised at a profit for the taxpayer in the immediate future."
But Tony Greenham, head of finance at the New Economics Foundation think-tank, said: "Instead of fattening RBS for a cut-price privatisation we should be making full use of our £45bn investment to turn it into a network of local banks, and let taxpayers reap the long-term rewards of RBS's revival."
RBS is paying £576 million in staff bonuses for 2013, down 15% on the year before.
Mr McEwan admitted that bonuses at a loss-making bank "sticks with the public".
But he added "I do not want our people looking across the road and saying 'I could get more money across there'."
Sir Philip said RBS would consider other banks' responses to the European Union bonus cap before it decides whether to seek investor approval to pay more than the limit.
Mr McEwan said a report by Lawrence Tomlinson into its handling of struggling small businesses had been "damaging". But he said the Government adviser had not participated in an inquiry into the claims by law firm Clifford Chance which had pushed back publication of its report to March.