The Royal Bank of Scotland looks set to record its first ever annual loss following a year of severe writedowns. The bank’s exposure to toxic assets would have seen the bank take a £1.4 billion hit under previous accounting rules in the third quarter, though new rules saw that figure reduced to £206 million. Forecasts estimate that RBS will make a £228 million loss this year, compared to last year’s pre-tax profits of £9.9 billion.
The bank’s incoming Chief Executive, Stephen Hester, blamed the performance on the bank making too many risky investments made in recent years. Hester said, ‘'We all have to accept that, partly because of the market disruption and economic downturn, all financial institutions will be in a period of rising credit losses. All businesses in all banks will exhibit these stresses because our customers are under pressure’.
RBS revealed that during the first nine months of the year, the number of loans in danger of defaulting rose across all divisions, representing 1.7 per cent of the bank’s total loans at the end of September. Furthermore, impairments on the bank’s debt also rose significantly, with a 9 per cent increase in the first nine months.
Royal Bank of Scotland Set to Record First Ever Annual Loss
Royal Bank of Scotland Set to Record First Ever Annual Loss
Wed, 05 Nov 2008
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