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Historic losses for Britain's second biggest bank

Latest update : 2008-08-03

The Royal Bank of Scotland is to announce the biggest loss in British banking history according to The Sunday Times newspaper. Britain's number two bank could suffer a loss of around 1.27 billion euros brought on by the global credit crunch.

The Royal Bank of Scotland will this week unveil the biggest loss in the history of British banking due to a multi-billion-pound hit from the global credit crunch, The Sunday Times reported.

RBS, which announces interim earnings on Friday, was predicted to reveal a pre-tax loss of at least 1.0 billion pounds (1.27 billion euros, 1.97 billion dollars) for the first six months of the year.

Analysts also warned that Britain's second largest bank could face a loss of as much as 1.7 billion pounds, the weekly newspaper added without citing its sources.

Strains from the global squeeze on credit would cost RBS almost 6.0 billion pounds, it added.

Earlier this year, RBS clinched a record-breaking rights issue totalling 12.0 billion pounds to shore up its finances after huge subprime-related writedowns and the mammoth takeover of Dutch giant ABN Amro.

Meanwhile, Britain's biggest bank HSBC will post first-half numbers on Monday, followed by peers Barclays and Standard Chartered.

Investors are on edge about the cost of write-downs caused by the US subprime or high-risk housing crisis and the subsequent tightening of global lending conditions.

Last week, British banks Alliance & Leicester, HBOS and Lloyds TSB said that their interim profits plunged dramatically as they felt the chill from the credit crunch.

Date created : 2008-08-03