RBS has a grim litany but is transforming

RBS has announced losses for the fifth year in succession. Photo: Joe Giddens/PA Wire/Press Association Images

Royal Bank of Scotland has announced a loss before taxes of 5.2 billion pounds in 2012.

That's a lot of money - and it's a loss each of us bears as RBS is four fifths owned by the government. You could argue the loss is about £66 per person in the UK.

Many of those losses can be put down to fines the bank has had to pay for its part in misselling PPI insurance, complex interest rate hedging products for small businesses and, of course, fiddling the Libor interest rate.

Stephen Hester says RBS will look 'clean and normal' going into next year. Credit: Ian Nicholson/PA Wire/Press Association Images

It's a grim litany but RBS is transforming. Once you strip out the fines and losses on debt, it made an underlying profit of £3.5 billion, almost double the figure last year.

The bank is also going through a massive restructuring, announcing today it's selling off more parts of the business and is focussing on its core interests - to become more British and less risky and much, much smaller than it was.

This is crucial to the bank's future and the Chief Executive, Stephen Hester, has just told journalists on an early morning call that he thinks RBS will look "clean and normal" going into next year.

RBS has begun a transformation. Credit: Johnny Green/PA Wire/Press Association Images

That means the government stake in RBS could be sold off - a re-privatisation - and there is a lot of speculation on how that might be done.

Mr Hester refused to get involved in that discussion but said "it's terrific if RBS is moving from people thinking of us as a problem and instead talking about selling us off."

RBS is not out of the woods yet and there will be much political noise about the £679 million bonuses still being paid to bankers (despite this being the fifth year of losses) and more fallout from the bank's misbehaviour in the past.

Civil litigation could trigger huge damages which could knock it back again.