Investors should stay away as RBS underperforms

As RBS report worse than expected results for 2010, Nick Raynor, investment adviser at The Share Centre, explains what this means for investors.

"As RBS is 84% owned by the state - making British taxpayers its main shareholder - the figures that are of most importance to us are the losses attributable to shareholders.  After costs related to the Government's toxic loan scheme, this stood at £1.13bn.

"There are no signs of RBS leaving the costly government insurance scheme until at least 2012.  Without the associated charges to this scheme, net loss would only have been £9m.

"There was some light at the end of the tunnel for investors as the tax-payer backed bank reported that net loss had fallen to £1.1bn for 2010, compared with £3.6bn the previous year.  This was driven by reduction in losses on bad loans over the year, a robust performance by its retail banking arm and a quicker than expected reduction in non core assets.

"RBS has been our least favourite of the banks for some time now and we continue to list it as a ‘sell'.  Others in the sector, namely Barclays, are better equipped to reward its investors and can offer far better returns."