RBS to reveal biggest loss in UK banking history


There has been a flurry of British banks reporting results and last week saw Alliance & Leicester announce that half-year profits have nearly been wiped out after taking a £209 million hit on risky assets and higher funding costs.

In addition, other banks to reveal significant falls in profits include Lloyds TSB and HBOS, who have both been hit by rising levels of bad debt.

Barclays is due to announce results this week, with a 35% fall in profits expected, as well as Royal Bank of Scotland (RBS), who is expected to reveal the biggest loss in UK banking history after taking a hit of almost £6 billion as a result of the credit crisis.

RBS, which is Britain’s second-largest bank, is due to post first-half losses of £1.2 billion. The loss would be approximately five times higher than that posted by Barclays in 1992.

Sir Tom McKillop, chairman of RBS, and chief executive, Sir Fred Goodwin, are both subject to shareholder scrutiny after the bank’s recent £12 billion rights issue.

The bank is on the lookout for three new non-executive directors to improve its board following shareholder concerns.

RBS recently completed the sale of Angel Trains to a consortium led by Babcock & Brown, the Australian infrastructure group.

The sale of Angel Trains delivered a profit of between £250-£300 million to RBS while supermarket giant Tesco recently bought RBS‘ 50% share in Tesco Personal Finance (TPF) in a deal worth £950 million.

Finally, it is believed that RBS is close to selling an Australian corporate-finance business, acquired when it took over ABN Amro, to Commonwealth Bank of Australia.

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