Let's face the facts. RBS is a crap bank. So is NatWest. Always have been and always will be., but have never let the fact that they are chock full of ineptitude from trying to pretend to be "investment bankers", whatever that devalued term means.
Of course to the staff of RBS, being "investment bankers" means bonuses, but the truth is that yet again they have done nothing to deserve a bonus, having collectively booked a £5 billion loss.
Oh but no, say the would be bonus recipients, that £ 5 billion underwaterness has after all sorts of retail PPI and Libor fines, nothing to do with us and anyway, the loss items were all extraordinaries and not part of the operating profit.
Up to a point Lord Copper. The few billion of LIBOR fines and PPI misselling penalties were actually dwarved by the loss on the "fair value of own debt", which as readers of this blog will recall is a function of prevailing interest rates. When the yield curve falls generally, then the fair value of the fixed rate borrowings made by the bank will rise, so they will owe more and the bank makes a loss because it is mnarking its debt to market.
But as I have said before, this mark to market is happening on their funding for their operations, so why is it not included in their operating profit. Add this number into their operating profit and they are already underwater om their operating profit (i.e. no bonus due), but by treating this annually recurring line as extraordinary (last year they booked a profit), they get to boost their operating profit. But this year, to make matters worse they changed their accounting policy so that some of their hedging losses are included in this fair value, artificially boosting their pre-bonus operating profits.
Shonky accounting for a shonky bank.