RBS Citizens, whose operations make up the No. 2 retail bank in Massachusetts, generated a $1.1 billion net loss in 2008 after slashing the value of a previous acquisition and setting aside more money for an escalating number of problem loans.

The size of the financial hit might surprise analysts and investors who have focused much of their attention on the bloodletting at Royal Bank of Scotland Group Plc, the corporate parent of Citizens. And for good reason.

Royal Bank of Scotland on Thursday is expected to report a 2008 loss of up to 28 billion pounds ($41 billion). That would be the biggest loss in British corporate history. British taxpayers control most of Royal Bank of Scotland, which has been partly nationalized after a decade-long acquisition spree contributed to massive losses.

RBS Citizens, known as Citizens Bank to customers in several New England states, has been a stable force inside a far-flung banking empire that did a few deals too many, namely Royal Bank of Scotland’s 2007 acquisition of Dutch bank ABN Amro.

But in a recent financial report filed with the Federal Deposit Insurance Corp., the amount of troubled loans on RBS Citizens’ books showed no signs of slowing down in the fourth quarter. For example, loans delinquent 30 days to 89 days totaled about $1.1 billion in the fourth quarter, compared with about $798 million at the end of September, FDIC data shows.

And in another category of problem loans, RBS Citizens reported holding $961.2 million in loans no longer gathering interest. That’s up 25 percent from the third quarter.

In addition, the 2004 acquisition of Charter One — also seen as an ill-advised move that cost about $10 billion — figured largely in a $1.6 billion write-down of goodwill. That helped turn what would have been a profitable year at RBS Citizens into a loser. The bank’s operations generated net income of about $1.1 billion in 2007.

While the goodwill hit is largely seen as a non-cash charge, RBS Citizens set aside real money in 2008 — $1.7 billion — for anticipated loan losses. That provision included an increase of about $600 million in the fourth quarter as consumers and businesses fell behind on their mortgages and commercial loans, FDIC data shows.