RBS and Lloyds face new losses

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Taxpayer-backed lenders Royal Bank of Scotland and Lloyds Banking Group will reveal the impact of another year of scandal when they report further big losses this week.

Left reeling from Libor rigging revelations and an ever-increasing bill for mis-selling claims, results from RBS and Lloyds are likely to confirm they face a lengthy road to recovery.

Barclays has already set the scene with its results earlier this month detailing another £2.5 billion to cover the costs of mis-selling in 2012, which came on top of its £290 million settlement for Libor fixing.

Fresh from agreeing its own settlement for the Libor scandal, RBS reports annual figures on Thursday, followed by Lloyds on Friday.

Bonuses are likely to be high on the agenda once more and banking analyst Ian Gordon at Investec Securities is expecting compensation provisions for mis-selling to plunge RBS, which is 81 per cent owned by the State, even deeper into the red. Losses could have mounted to £3.9 billion in 2012 - far worse than the £766 million reported for 2011.

RBS is said to be looking at selling a minority stake to private equity and institutional investors, following the collapse of the sale to Santander.

Lloyds is also facing rumours over branch sales amid doubts a deal with The Co-operative will take place.

Most analysts are expecting the bank, which is 39 per cent owned by the Government, to make pre-tax losses of £544 million for 2012 after mis-selling charges, although Mr Gordon is pencilling in a £1.4 billion loss. He is expecting another £700 million in PPI provisions in the fourth quarter alone, with around £200 million for interest rate swaps.