The Royal Bank of Scotland Friday posted a five-fold jump in write-offs linked to the credit crunch in its first-half, and went on to warn that bad debts would remain "high for a while."
AFP - State-rescued Royal Bank of Scotland reported a five-fold jump in write-offs linked to the credit crunch, to 7.5 billion pounds, and warned on Friday that bad debts would remain "high for a while".
The surge in first-half impairment charges led to RBS to report a 26-percent jump in net losses during the six months to June 30 compared with the figure for the same period last year.
"Our first half results, as we had clearly warned, are poor with a net attributable loss of one billion pounds," RBS chief executive Stephen Hester said in a bleak results statement from the government-controlled bank.
"Impairments rose 409 percent to 7.5 billion pounds (8.8 billion euros, 12.6 billion dollars) and are set to stay high for a while," Hester warned of the bank's credit-crunch related bad debts.
"There will be no miracle cures. Our task is no less than one of the largest bank restructurings ever done, in the face of strong economic headwinds.
"Overall results may not substantially improve until 2011 and a full recovery will take time," he added.
In early morning trading, the share price of RBS slumped almost 14 percent to 46 pence on London's benchmark FTSE 100 index, which was down 0.55 percent.
RBS managed a pre-tax profit of 15 million pounds in the six months to June 30 after a loss of 726 million pounds in the first half of 2008. Some analysts had expected profit before tax totalling 1.5 billion pounds..
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 since last year.
The troubles at RBS have meanwhile led to a boardroom shake-up with Hester replacing disgraced former chief executive Fred Goodwin, who led the bank to Britain's biggest annual corporate loss of more than 24 billion pounds in 2008.
On Friday, RBS announced the appointment of Bruce Van Saun, a former Bank of New York Mellon chief financial officer, as its new finance director, completing an overhaul of the British bank's top executive team.
In a bid to cut costs, Royal Bank of Scotland announced on Tuesday that it was selling part of its Asian operations to Australia and New Zealand Banking Group for 418 million dollars.
It is also slashing up to 9,000 jobs by 2011, half of them in Britain, to save 2.5 billion pounds.
RBS is the last of Britain's main banks to have posted their half-year results. Another state-controlled lender, Lloyds Banking Group, on Wednesday reported a first-half net loss of 3.12 billion pounds, which compared with net profit of 1.95 billion pounds a year earlier.
LBG added that its impairment levels had probably peaked amid a deep recession in Britain.
Also this week, emerging markets bank Standard Chartered posted record interim profits, while Barclays and HSBC posted combined first-half net profits of 6.55 billion dollars despite massive bad debts.
Date created : 2009-08-07