Giant suffers quarterly loss as writedown provisions hit £3.3bn
Saturday November 07 2009
Royal Bank of Scotland (RBS), parent of Ulster Bank, turned in a third-quarter loss after £3.3bn (€3.7bn) of provisions for bad loans and credit-market writedowns.
The net loss was £1.8bn, compared with a profit of £871m in the year-earlier period.
"The news was bad, but could have been worse," said John Smith, a fund manager at private bank Brown Shipley in Manchester. The shares gained 5.3pc in London trading.
RBS is getting a total of £45.5bn in capital from the British taxpayer. This week, the 70pc government-owned lender said it would sell its insurance assets, an investment banking division and a credit card payment unit to win EU approval for taxpayer aid.
The operating loss narrowed to £1.5bn from £3.5bn in the second quarter. This shows the bank is controlling costs and profiting on the difference between its borrowing costs and the amount it charges customers on loans, said Mr Smith.
Assets
The bank plans to insure £282bn of risky assets, including Ulster Bank loans, with the government after posting the biggest loss in British corporate history last year, of £24bn.
It aims to reduce a balance sheet that climbed to more than £2.2 trillion.
In February, RBS said it would transfer £540bn of toxic assets into a new unit to be wound down or sold over three to five years. About two-thirds of the provisions were made in the "non-core" division, the group said yesterday.
In the core unit, Ulster Bank and Citizens in the US were experiencing increased bad loan provisions, it said. (Bloomberg)
Irish Independent
