The UK's Royal Bank of Scotland has posted a net loss of $34.4bn for 2008 – the biggest ever loss in British corporate history.

Announcing the news on Thursday, the bank unveiled plans to cut $3.56bn in costs as part of a massive restructuring programme, which could see up to 20,000 jobs cut.

It also emerged that Fred Goodwin, the bank's former chief executive who was largely blamed for leading it into disaster, has begun drawing a pension worth $713,000 a year, despite being only 50-years-old.

Stephen Hester, Goodwin's successor, said the "key building blocks for RBS's recovery are now in place," but added that did not mean it would bounce back successfully.

"There's a massive amount of hard work to do and obstacles to overcome, but we now have the job of execution," he said.

Jonah Hull, Al Jazeera's correspondent in London, said RBS's loss marked "the decline of a grand British banking institution, a bank that was very global, that was well respected and very well thought of".

Risky assets

RBS has confirmed that it will offload so-called toxic assets into a government insurance programme.

The bank has already been part-nationalised under government bailout packages worth almost $30bn.

The UK government is set to unveil a scheme that could insure more than $700bn worth of banks' risky assets, potentially giving it a 95 per cent stake in RBS.

The scheme is designed to restore confidence into the banking system and get credit flowing again into the recession-hit British economy.

Alistair Darling, Britain's finance minister, defended the government's move, saying it was "recognising that the banks need to clean up their balance sheet."

But he criticised Goodwin's pension, saying he had asked the former bank chief to forfeit the package.

"People will find it very hard to understand that you can be paid £650,000 a year for the rest of your life when just look at the state RBS is in," he told BBC radio.

RBS's huge loss contrasts with the $10.5bn profit the bank made in 2007.