RBS annual net loss widens to almost Â£2 bln State-rescued Royal Bank of Scotland on Thursday said its net losses widened to almost Â£2 billion in 2011, hit by the Greek debt crisis and compensation linked to insurance mis-selling. RBS, 82-percent owned by the British government after a massive bailout in the wake of the financial crisis, unveiled losses after tax of Â£1.99 billion (2.35 billion euros, $3.12 billion) for 2011, up from Â£1.12 billion in 2010. Pre-tax losses surged 92 percent, while profits at the bank's investment division tumbled 54 percent, RBS added in an official earnings statement. "After the effect of several large one-off items such as ... compensation costs, Greek sovereign debt impairments, and integration and restructuring costs, the group reported a pre-tax loss of Â£766 million," the bank said. RBS took a Â£1.1 billion hit on the value of its Greek government bonds. The lender has also been hit by having to pay compensation totalling hundreds of millions of pounds to customers who were mis-sold insurance policies by the bank. Chief executive Stephen Hester told reporters: "Our job is to diffuse the biggest-ever time bomb in banking balance sheets." The bank paid staff a total bonus pot of Â£785 million, down 43 percent compared with 2010. This included Â£390 million for its 17,000 investment banking staff, down 58 percent. Ahead of the results, Hester bowed to public anger and waived his annual bonus of shares worth Â£963,000 on top of his Â£1.2 million salary. The large bonus, coming amid ongoing government austerity and economic gloom, had sparked outrage among trade unions and opposition politicians because RBS has been almost fully nationalised following its rescue. In January meanwhile, the former chief executive of the Royal Bank of Scotland, Fred Goodwin, had his knighthood stripped by Queen Elizabeth II over his role in the bank's near-collapse in 2008. British finance minister George Osborne welcomed Thursday's cut in the bonus pool but stressed that in was in the nation's interest that RBS received the necessary backing to return to health. "Our main interest should be to get back as much money as possible for taxpayers and we must not let those that want to create an anti-business culture put that at risk," he added. Hester meanwhile warned that persistent criticism of RBS harmed its progress. No one should be under any illusions. You can't have your cake and eat it," he said. The noise around RBS is very damaging. Since 2008, the British state has injected a massive Â£45.5 billion of state money into RBS, which needed saving from the US housing market crash and a disastrous multi-billion-pound takeover of Dutch rival ABN Amro in 2007. "The job of rebuilding the group is far from complete," RBS chairman Philip Hampton said on Thursday. "The need to address the legacy of losses in a number of businesses means that the group is not yet profitable, although in 2011 our core businesses earned a profit of Â£6 billion" -- a figure that sent the bank's shares higher. RBS recently said it would cut 3,500 more jobs over the next three years as the group shrinks its investment banking activities -- bringing to 34,000 the number of posts the bank has slashed since late 2008. On Thursday, the bank added that its core tier one ratio, or buffer against future financial crises, dipped to 10.6 percent last year, although the level was above the 9.0 percent mark requested by the EU's banking regulator. RBS shares rose 3.4 percent to 28.26 pence in early deals on London's FTSE 100 index, which was up 0.40 percent at 5,939.64 points.