Laith Khalaf

ALMOST 10 years after the financial crisis that brought it to the brink of collapse, RBS is still mopping up the mess left by its former executives, who over-stretched the balance sheet, just as the global banking system went into meltdown.

Since then, a £45 billion taxpayer bailout is now eclipsed by £54bn of losses, with investors waiting for a ninth consecutive year of losses to be announced on Friday.

The problems faced by the bank have been deep and manifold. De-risking and restructuring the bank has been a huge task. But it has been compounded by the ongoing £16bn cost of misconduct, largely relating to PPI and litigation in the US over misselling mortgage backed securities.

Read more: Analysts say RBS still years away from private ownership

RBS was also required by European competition authorities to spin off a challenger bank, Williams & Glyn, as part of the terms of its bailout. After huge costs it now looks like RBS is going to be unable to get finalise it, though the saga seems to be heading towards a resolution that will involve RBS simply paying its way out of its obligations.

All of this comes against a backdrop of low interest rates, which have depressed bank profits, and more onerous regulation requiring banks to build up capital ratios, so if an economic storm hits again they are better place to weather it.

No wonder then, that progress at RBS has been painfully slow. The successful turnaround at Lloyds, which is almost entirely back in private hands, only serves to highlight RBS’ inadequacies.

Read more: Analysts say RBS still years away from private ownership

It is too early to talk about the Government selling its stake in RBS; the share price needs to double from its current level for the taxpayer to break even. But the bank is heading in the right direction. The risk now is another economic downturn.

Laith Khalaf is a senior analyst at stockbroker Hargreaves Lansdown.