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RBS expects full-year loss up to 28 billion pounds

ROYAL Bank of Scotland said today that its losses for the full-year could be as much as 28 billion pounds (US$41.3 billion), which would be the biggest loss ever by a UK corporation.

The bank said it expected to mark down the value of past acquisitions including the takeover of ABN Ambro by 15 billion to 20 billion pounds, plus posting other losses up to 8 billion pounds after a dismal fourth quarter.

In an announcement today, the bank said it expects a "break-even underlying financial performance after credit impairment losses." It said profits in retail and commercial business in the UK had been offset by losses in its global banking and markets division.

The bank also announced that it had reached agreement with the government, which now owns 58 percent of the bank's shares, to convert 5 billion pounds in preference shares held by the government to ordinary shares. RBS said it would offer 5 billion pounds worth of ordinary shares at 31.75 pence, underwritten by the UK Treasury.

Alex Potter, banking analyst at Collins Stewart, said the government was likely to end up owning 70 percent of the bank.

The largest full-year loss previously reported by a UK corporation was 15 billion pounds by Vodafone in 2006.

"The dislocation of credit markets and the global economic downturn continue to hit RBS hard, as with many other banks," said Group Chief Executive Stephen Hester.

"Significant uncertainties and risks inevitably remain. In this context, the support we are receiving from government benefits all our stakeholders and enables us to provide more customer support in return," he added.

Royal Bank of Scotland shares were down 15 percent at 29.5 pence (43.5 cents) in early trading on the London Stock Exchange. They were trading at around 300 pence a year ago.


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