Business Irish

Monday 29 May 2017

RBS falls on €49bn Ireland loans

RBS: 'significant exposure' to crisis in Ireland. Photo: Bloomberg News
RBS: 'significant exposure' to crisis in Ireland. Photo: Bloomberg News

Royal Bank of Scotland, the UK’s biggest government-owned lender, dropped in London trading because of investor concern about £42.2bn (€49bn) of loans to Ireland, according to MFGlobal Securities analyst Shailesh Raikundlia.

The stock lost as much as 5.6pc and traded 4pc down at 40.46 pence as of 10:50am, the lowest in four months.

The bank was the second-worst performer in the Bloomberg 500 Banks Index after Bank of Ireland.

“It’s to do with their exposure to Ireland,” said Raikundlia. “They have significant exposure.”

Irish bond yields have soared on concern that the Government will need assistance bailing out its banks, which are struggling with bad loans after the end of the property estate boom.

Central Bank Governor Patrick Honohan yesterday said that loan losses at the country’s lenders, including foreign-owned banks, come to at least €85bn.

RBS’s Ulster Bank unit had £37.8bn (€44.4bn) of loans in Ireland, including £21.4bn of mortgages at the end of the third quarter, the bank said last week.

It also had £4.3bn invested in Irish sovereign debt, according to stress tests in July. A spokesman for RBS declined to comment on the price movement.

RBS last week said loan losses in Ireland “increased sharply, reflecting a deterioration in the economic environment.”

Ulster Bank posted loan losses of £286m in the three months ending September 30, double those in the year-earlier period. It also doubled its pretax operating loss to £176m.

RBS, based in Edinburgh, was bailed out in 2008 and 2009 with £45.5bn of government assistance to bolster its capital. Taxpayers own 83pc of the lender.

Bloomberg

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