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Business

RBS lost £857 million in first quarter

Latest update : 2009-05-08

The Royal Bank of Scotland, saved from bankruptcy after being partially nationalised by the British government, has announced it lost £857 million after taxes in the first quarter of 2009, hit by write-offs linked to the credit crunch.

AFP - Royal Bank of Scotland, the British lender recently rescued by the taxpayer, reported Friday a first-quarter net loss of 857 million pounds as write-offs linked to the credit crunch soared.

The net loss, equivalent to 959.5 million euros and 1.285 billion dollars, compared with profit after tax of 245 million pounds during the first three months of 2008, the lender said in an earnings statement.

RBS added on Friday that credit market losses and write-downs linked to its part-takeover of Dutch lender ABN Amro totalled 4.927 billion pounds in the first quarter, offset by a strong performance from its global investment arm.

"The results demonstrate the challenging conditions we face and that we expect to continue," RBS chief executive Stephen Hester said in the statement.

"Our core customer franchises are facing the reality of a sharp recession following a year in which the credit markets crisis caused our worst ever performance."

The bank's operating profit before impairment losses jumped 42 percent to 4.079 billion pounds.

RBS said this reflected "a strong income performance within Global Banking and Markets across all its businesses, with the performance benefiting from particularly favourable conditions in rates, currencies and commodities."

The group's total income rose 26 percent to 9.7 billion pounds in the first quarter from a year earlier.

RBS, ravaged by the credit crunch and the 2007 takeover of Dutch group ABN Amro at the top of the market, is 70-percent owned by the British government, which has pumped billions of pounds into the ailing bank over the past year.

In a bid to save 2.5 billion pounds, RBS said last month it was cutting up to 9,000 jobs over the next two years, half of them in Britain.

The troubles at RBS have meanwhile led to a boardroom shake-up with Hester replacing disgraced former chief executive Fred Goodwin, who last year led the bank to Britain's biggest corporate loss of more than 24 billion pounds.

In March, vandals attacked the home of Goodwin, who has been widely criticised over the size of his pension, which totals 700,000 pounds a year.

Goodwin, 50, has refused government requests to voluntarily give up part of his pension pot, despite criticism including from Prime Minister Gordon Brown.

Date created : 2009-05-08

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