Britain's second-biggest bank has unveiled the largest loss in UK banking history today of £691m after taking a credit crunch hit of almost £6bn.
The banking group, which owns NatWest, Direct Line and Coutts, wrote down the value of assets by £5.9bn in April, which would sink it to a loss of about £1.2bn.
The figure represents a huge fall from profits of £5bn for the first half of 2007 - due to both the credit crunch and a costly takeover of Dutch bank ABN-Amro.
Chief executive Sir Fred Goodwin, who was forced to launch a £12 billion rights issue earlier this year to shore up the firm's balance sheet, said the loss was a "chastening experience" that he and his colleagues "regret very much".
Sir Fred said: "This loss is a consequence of previously signalled writedowns on credit market exposures amounting to £5.9 billion.
"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."
One leading city analyst said it was likely that Royal Bank Of Scotland would have to raise another £4bn from shareholders and new investors.
The grim predictions come as Barclays announced that it had racked up net losses of £2bn as a direct result of the credit crunch.
Its first-half profits slid 33% against last year.
Announcing the results, Barclays boss John Varley said market conditions for the past 12 months had been "as difficult as we have experienced in many years".
Like RBS, Barclays has taken steps to boost capital this year.
The bank, which still managed to record £2.5bn profits, issued £4.5bn of new shares in late June.
Meanwhile, a recent £12bn cash call by RBS has already placed chairman Tom McKillop and chief executive Sir Fred Goodwin under intense pressure.
The Barclays results were roughly in line with the 28% drop in profits announced by HSBC earlier in the week.
Lloyds TSB, Halifax Bank of Scotland and Alliance & Leicester have fared a lot worse, with profit drops of 70%, 72% and 99% respectively.
Source: http://uk.biz.yahoo.com/08082008/140/rbs-unveils-record
-banking-loss.html
