Royal Bank of Scotland sought to shake off its reputation as Britain's pariah bank on Thursday with plans to cut more costs and reposition itself as a UK-focused retail and commercial lender.
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New chief executive Ross McEwan is under pressure to restore RBS's standing with its political masters and the general public after a year of fines, customer complaints and technology problems.
The bank, which is 81-percent owned by the government, on Thursday posted an 8.2 billion pound ($13.64 billion) pretax loss for 2013 due to restructuring costs and misconduct charges.
That brings the total RBS has lost since it was bailed out in 2008 to 46 billion pounds ($76.53 billion)- just above the amount taxpayers paid for its rescue during the financial crisis.
"We are the least trusted company in the least trusted sector of the economy. That must change," McEwan told an audience of employees and customers at The Trampery, a new business hub funded by RBS in the east of London.
Analysts warned it would take time for investors to see the benefit of the restructuring and there were high risks to the plan. RBS stock was the top faller among European banking shares, down 8 percent.
"We are skeptical of there being a lot of low-hanging fruit in the cost-save department given 7 billion pounds in restructuring charges taken under previous management," Jason Napier, analyst at Deutsche Bank, who has a "sell" rating on the shares.
McEwan said the bank would need to think about the implications for its Edinburgh headquarters if Scotland voted in favor of independence in September.
Insurer Standard Life said earlier on Thursday it could move part of its business out of Scotland if it votes to leave the United Kingdom.
RBS said independence would likely hit its credit ratings, a move that would typically increase funding costs.
"This is a huge issue for Scotland and we are neutral and won't do anything to raise the temperature of that vote," McEwan said.
RBS has become, as one parliamentarian put it this week, "the unacceptable face of British banking". While taxpayers sit on a paper loss of around 16 billion pounds, it has continued to pay bumper bonuses.
This year, RBS is paying out 576 million pounds in staff bonuses for 2013, down 15 percent on the year before. Britain's deputy prime minister Nick Clegg later said on UK television, that a lossmaking bank, "shouldn't be dishing out ever larger bonuses."
McEwan, who has waived his bonus for last year, defended the payouts, which had been agreed with UK Financial Investments, the agency that manages the government stake.
"We need to be pragmatic. I need to pay these people fairly in the market place to do the job," he said.
RBS's global ambitions nearly felled the bank and it has made huge progress in slashing 1 trillion pounds off what was once the biggest balance sheet in the world.
McEwan wants to simplify the bank further by cutting its divisions from seven to three, reducing investment banking and shrinking its hundreds of committees.
He said the decision to focus the bank around three core areas - retail, commercial and corporate - and to concentrate 80 percent of the bank's assets in the UK, from 60 percent now was not politically motivated.
"This is our plan. We own it," he said.
The government pushed out McEwan's predecessor, Stephen Hester, last year partly because of his continuing commitment to the bank's large investment banking franchise.
Britain's finance ministry said McEwan's plan delivered the government's vision for a bank focused on lending to British businesses and families.
RBS is planning to cut costs by 5.3 billion pounds, or 40 percent, over the next three to four years, with 3.1 billion of that coming from the sale of businesses such as its U.S. retail franchise Citizens and the rest from cutting overheads.
In the meantime, RBS warned that there would be "elevated" restructuring costs over the next two years to get the bank's customer service up to scratch and its costs down.
Unlike Lloyds, which also received a state bailout and has been selling its government-owned shares, RBS is years away from privatization.
"We need to recognize that we are not yet a strong enough bank that can be privatized at a profit for the taxpayer in the immediate future," McEwan said.
"There is no point avoiding this inconvenient truth."