A logo of an Royal Bank of Scotland (RBS) is seen at a branch in London
RBS reported £3.5bn loss in 2014Reuters

RBS has announced a £3.5bn loss for 2014, down from a £9bn loss in the previous year.

The bank, which is 79% owned by the state, said the loss was down to writing off £4bn from the value of its Citizens bank in the US.

RBS was also heavily punished for its behaviour relating to foreign exchange manipulation and PPI related compensation.

The bank has confirmed Howard Davies as its new chairman. Davies used to serve as chief at the Financial Services Authority.

RBS also said it will drastically shrink its investment banking operations, pulling out of 25 countries across Europe, Asia and the Middle East in order to refocus on local lending in Britain.

Rory Cullinan, RBS's restructuring chief, will be in charge of withdrawing the investment bank from central and eastern Europe, Africa, the Middle East and large parts of Asia.

He replaces Donald Workman, who has been appointed executive chairman of RBS's private banking franchise, Coutts, Reuters reports.

The bank's chief executive Ross McEwan has agreed to forgo the "role based" part of pay package, which is worth £1m.