LONDON (AP) -- Royal Bank of Scotland was once the biggest bank in the world. Now it's not even the biggest in Britain. And it is about to get smaller still.
RBS was saved in 2008 by a 45 billion-pound (about $80 billion at the time) government rescue after its move to become the world's largest bank through a massive debt-fueled acquisition backfired. The bailout left the British government with an 81 percent stake -- and mounting losses.
On Thursday, after reporting another whopping loss -- 9 billion pounds ($15 billion) for 2013 -- RBS said it would stop trying to be a world player and cut its losses. Amid pressure from the government, Chief Executive Ross McEwan unveiled plans to reduce its global presence and to make operations less risky.
"Let me spell it out very clearly: the days when RBS sought to be the biggest bank in the world -- those days are well and truly over," said McEwan, who became CEO in October. "Our ambition is to be a bank for U.K. customers."
McEwan pledged to make the bank "smaller, simpler and smarter," shrinking it from seven divisions to three. British media have reported that it would lose as much as one-quarter of its 120,000-strong workforce, some of which is likely to come from the sale of businesses.
RBS plans to sell shares in Rhode Island-based Citizens Bank, which employs about 18,500 people. And it will further shrink its investment arm, which is already two-thirds smaller than before the crisis.
"It's a watershed moment," said Iain Martin, author of "Making It Happen: Fred Goodwin, RBS and the Men Who Blew Up the British Economy." ''It's the end of RBS' global dream."
Once a provincial institution, RBS became a global bank after former CEO Fred Goodwin spearheaded a string of purchases, including of Dutch lender ABN Amro, which ballooned its balance sheet to as much as 2.2 trillion pounds on the eve of the crisis, bigger than the U.K. economy. Among the many acquisitions was Coutts, banker to the Royal Family and an institution that traces its history to the patronage of Queen Anne in 1708.
Goodwin became a knight of the realm, a corporate titan pictured with his rifle folded over his arm while on the shoot or chatting with Jack Nicklaus. Once the pride of Scotland, politicians sought to claim RBS's success as an example of the country's resourcefulness.
The fall was equally spectacular. Hobbled by disastrous takeovers, it fell victim to the subprime crisis and turned to the government for cash.
Anxious to get the RBS house in order before the next national election in 2015, the government has been pressing for action. But Thursday's announcement underscores that returning to the private sector is still a distant dream -- even as the cuts will make it harder to make money. Shares dropped 8 percent on the news, to 325.70 pence.
The new strategic vision makes it less focused on investment banking and peripheral interests -- a strategy described by Ian Gordon, an analyst at Investec, as one that eliminates "flag planting" to stake out interests around the globe.
He estimates RBS may be able to deliver a profit "in 2018 - but certainly not before."
But there may never be good news for those who bailed out the bank. Martin predicted taxpayers can expect a loss of up to 10 billion pounds when the government finally sells shares to investors. Such a loss would be roughly equivalent the cost of staging the 2012 London Olympics.
"The bank being sold to investors will be much smaller and a very different proposition from the financial behemoth that had to be rescued," he said.
In a somber speech that bordered on penitence, McEwan pledged he would do the "hard graft" to regain the trust of customers.
"We are the least trusted company in the least trusted sector of the economy," McEwan said. "That must change."
But one aspect of its latest earnings statement failed to build confidence -- the 576 million pounds it will pay out in bonuses. Business Secretary Vince Cable was sharply critical.
"If RBS is to become the sensible, boring bank envisaged by the CEO, the bonus culture will have to go."
Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.