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RBS set for £1.7bn UK record bank loss
Nick Goodway4 Aug 2008
Sir Fred Goodwin, chief executive of NatWest owner Royal Bank of Scotland, is set to come under renewed pressure from investors this week as the bank is forecast to report the biggest-ever loss in UK banking history.
Analysts predict that RBS will take another £6 billion hit from the credit crunch, driving its first-half loss for the year to as much as £1.7 billion.
That would be as much as five times the amount Barclays lost in 1992 at the height of the last recession which was the previous record.
RBS reports its first-half numbers on Friday and chairman Sir Tom McKillop, alongside Goodwin, is expected to face increased scrutiny when they meet top investors of the following week.
The RBS board has already been heavilycriticised for its role in the Euro 71 billion consortium takeover of Dutch bank ABN Amro and the subsequent £12 billion rights issue.
Analysts say that much of this week's writedowns will come as a result of the ABN deal. Barclays, which reports on Thursday, is expected to see a 35% drop in first-half profits to around £2.6 billion as tougher economic conditions in the UK combine with global credit crunch pressures.
It is forecast to add a further £3 billion of writedowns to the £1.7 billion which it revealed for the first three months of the year.
Reader views (1)
If this true - and the word in the Square Mile leads me to believe it is - then Sir Fred and Sir Tom should make ready for the exit door - and without some totally unwarranted pay off. I am a long-standing shareholder in RBS and over the last 12 months I have seen my nest egg/retirement fund blown away by some of the most cavalier risk taking I have ever seen. I have worked in the finance industry for some 35 years and I thought I'd seen it all. The ABN transaction? An ego too far. All the signs were there before the deal was struck - sorry Sir Fred, there were plenty of bad omens in front of you but you just couldn't resist it. Barclays must be laughing like drains and look at the mess they're in. In terms of the bank reporting season the common message is that market trading conditions are really tough right now, something we can relate to on the home economic front. But, with the UK banks there would appear to be (B&B excepted)only one real stinker: RBS. Sorry for thinking that the Rights Issue was supposed to go a long way to sorting this out? Getting the writedowns and writeoffs into the open - be transparent - let the market see what's really going on.
There is some sanity out there. The results from HSBC, Standard Chartered and Santander and the statements from their respective Chairmen, pretty much show how banks should be run. See Sir Fred? It can be done. I'll bet Mervyn Davies (Stan Chart) is smiling tonight and on Friday - smiling all the way to the bank.
- Martin, North London, 05/08/2008 22:24
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