£1.5 billion losses expected at RBS
by Kay Murchie
It is expected that the Royal Bank of Scotland will this week admit to a £1.5 billion loss as a result of the credit squeeze.
The losses are to be revealed in a trading statement later this week, however, RBS, Britain’s second largest bank, will argue that the diverse nature of its operation will withstand the current financial crisis.
Shares in the bank have been hit hard this year and have lost over 30% of their value. Investors have been concerned by the threat of huge write-downs by western banks totalling £24 billion but RBS has a strong presence in the debt markets but there is speculation that the bank will announce a £12 billion write-down.
Analysts at Sanford Bernstein predict that the losses would be £1.9 billion, higher than the £1.3 billion sub-prime mortgage related charge issued by Barclays recently.
It is expected that Sir Fred Goodwin, RBS chief executive, will restore confidence in the market with relation to its capital position.
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