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RBS looking at biggest loss of US$41b
By Jon Menon |
January 20, 2009, Tuesday
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Print Edition
Print Edition
ROYAL Bank of Scotland Group Plc said it may post a loss of as much as 28 billion pounds (US$41 billion), the biggest ever reported by a United Kingdom company, as the credit crisis worsens.
Britain's biggest government-controlled bank may post a full-year loss before exceptional goodwill impairments of as much as 8 billion pounds, Edinburgh-based RBS said in a statement yesterday. In addition, the bank may write down the value of past acquisitions by as much as 20 billion pounds.
The loss would eclipse Vodafone Group Plc's 22 billion-pound net loss in 2006. RBS has been crippled by its acquisition of ABN Amro Holding NV's investment banking assets three months before the credit crisis began, a takeover Chancellor of the Exchequer Alistair Darling yesterday called "disastrous." The Treasury said yesterday it may raise its stake in RBS.
"I am angry at the Royal Bank of Scotland and what has happened," Prime Minister Gordon Brown said at a press conference in London yesterday.
The bank took "irresponsible risks," in investing in United States subprime mortgages and ABN Amro, he said.
Chief Executive Fred Goodwin spent almost US$90 billion on takeovers after he became CEO in 2000, culminating in his 14.3 billion-euro (US$19 billion) acquisition of ABN Amro in 2007. Goodwin was ousted in October after the government agreed to take control of the 282-year-old Scottish bank, Bloomberg News said.
"The previous management made this disastrous acquisition of Dutch bank ABN," Darling told BBC Radio 4 yesterday.
RBS shares dropped almost 20 percent to 27.9 pence at 9:40am in London trading, their lowest value since at least September 1988.
The shares have slumped about 90 percent in the past 12 months, cutting RBS' market value to 10.9 billion pounds.
"The numbers are truly horrible," said Robert Talbut, who helps manage about US$31 billion at Royal London Asset Management.
"The government is very clearly in the driving seat, and I would expect RBS to shrink back to being a more UK-focused bank."
Britain's biggest government-controlled bank may post a full-year loss before exceptional goodwill impairments of as much as 8 billion pounds, Edinburgh-based RBS said in a statement yesterday. In addition, the bank may write down the value of past acquisitions by as much as 20 billion pounds.
The loss would eclipse Vodafone Group Plc's 22 billion-pound net loss in 2006. RBS has been crippled by its acquisition of ABN Amro Holding NV's investment banking assets three months before the credit crisis began, a takeover Chancellor of the Exchequer Alistair Darling yesterday called "disastrous." The Treasury said yesterday it may raise its stake in RBS.
"I am angry at the Royal Bank of Scotland and what has happened," Prime Minister Gordon Brown said at a press conference in London yesterday.
The bank took "irresponsible risks," in investing in United States subprime mortgages and ABN Amro, he said.
Chief Executive Fred Goodwin spent almost US$90 billion on takeovers after he became CEO in 2000, culminating in his 14.3 billion-euro (US$19 billion) acquisition of ABN Amro in 2007. Goodwin was ousted in October after the government agreed to take control of the 282-year-old Scottish bank, Bloomberg News said.
"The previous management made this disastrous acquisition of Dutch bank ABN," Darling told BBC Radio 4 yesterday.
RBS shares dropped almost 20 percent to 27.9 pence at 9:40am in London trading, their lowest value since at least September 1988.
The shares have slumped about 90 percent in the past 12 months, cutting RBS' market value to 10.9 billion pounds.
"The numbers are truly horrible," said Robert Talbut, who helps manage about US$31 billion at Royal London Asset Management.
"The government is very clearly in the driving seat, and I would expect RBS to shrink back to being a more UK-focused bank."
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