In a statement made on Thursday, The Royal Bank of Scotland announced that it was shutting down its “bad bank,” which was conceived to tackle the toxic assets created during the 2008 financial crisis.
RBS’ Capital Resolution division was set up after the bank was bailed out of its financial crisis by the UK government. The division was commonly referred to as the “bad bank,” and has been in function all these years as the RBS fought to escape purgatory.
The closure of the division point to the dawn of better days for the RBS, which saw its balance sheet reduce from £2.2 trillion in 2008 to the £752 billion it stands at today.
Speaking of the event, the CEO of RBS, Ross McKewan stated that the closure was a “key moment” in the bank’s history.
He stated that “It has taken nearly 10 years to undo the consequences of the global ambitions pursued by RBS in the run up to the crisis”. He called the closure of the division “an unprecedented achievement”.
Although the RBS sustained major losses over the years, he stated that it was a “smaller, safer bank” today.
However, the division’s closure also means that over half of the staff employed will be without jobs. From a mammoth enterprise with over 19,000 employees in 2008, the division has retained only 80.
The news came on the heels of the RBS’ success in the Bank of England’s stress test, which it had earlier failed in 2016.
In plans announced last week, the Scottish government went ahead and revived its plans to sell down the government’s 72% stake in the bank.
It added that it hoped to sell at least £15 billion of those shares by 2023.