RBS unveils first loss in 40 years

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The group reported statutory pre-tax losses of £692 million for the six months to June 30 - which compares with profits of £5 billion the previous year.

Chief executive Sir Fred Goodwin, who was forced to launched a £12 billion rights issue earlier this year to shore up the firm's balance sheet, said the loss was a "chastening experience" that "I and my colleagues regret very much".

NatWest owner RBS had already alerted investors to a £5.9 billion credit crunch writedown when it launched the rights issue in April.

Sir Fred said: "This loss is a consequence of previously signalled writedowns on credit market exposures amounting to £5.9 billion. In response to these new market conditions we moved decisively to strengthen our capital position materially.

"In so doing we are acutely aware that we drew heavily on our shareholders for financial support and we recognise that we must now deliver a level of performance that meets their expectations for the company and restores value to our shares. We are determined to do so, and this is our focus."

The group last year led a consortium that bought Dutch bank ABN-Amro for nearly £50 billion.

RBS's pro-forma loss for the six months this year, which assumes that ABN-Amro had been bought on January 1, 2007 and is used by management to compare progress over the period, was £691 million.

On the pro-forma basis, the group said its capital ratios - a measure of how strong the balance sheet is - were ahead of target. The core Tier 1 ratio was 5.7%, compared with a 5% target.

The bank said it has increased its bad debt charge by 58% to £1.48 billion, representing 0.46% of loans and advances. Management was seeing "some increased strains" particularly among small business clients, it added, but has been offset by reductions in losses among personal unsecured debts thanks to a "conservative approach" to this sector in recent years.