Britain's RBS reports loss after Greek writedown

AP News
Posted: Aug 05, 2011 6:49 AM
Britain's RBS reports loss after Greek writedown

Royal Bank of Scotland Group PLC swung to a second-quarter loss Friday as it wrote down the value of its Greek bond holdings by a massive 733 million pounds ($842 million).

The bank reported a net loss of 897 million pounds, compared with a profit of 257 million pounds in the same period last year as the Greek write-down and a previously announced charge weighed on the bank's bottom line.

RBS said it could recover some 275 million pounds of the hefty impairment charge for Greece later this year if the proposed restructuring of the country's government debt is put in place.

The bank's results also reflected an 850 million pound charge, which RBS had set aside for customers who were missold payment protection insurance on mortgages and other loans.

RBS, which is 83 percent owned by the British taxpayer, has hundreds of millions of pounds of exposure to Greek debt, making it vulnerable to the country's ongoing crisis. Many of those losses are tied to its acquisition of Dutch bank ABN Amro.

Chief Executive Stephen Hester told the BBC that RBS's restructuring was going well.

"We are getting risk down, the bad assets _that have been dogging us from past years _ are coming down and I feel comfortable with the way that part of the RBS plan is unfolding."

But he added that market turmoil of the past 24 hours has showed that economic downturn was "not a banking crisis" but "one of global economic imbalances."

"The root of what's going on and the nervousness hitting markets again is really about how we manage our economies both globally and individually," he said. "It is certainly a worrying time."

RBS shares sank in early London trading, mirroring a broad rout in global stock markets. By mid morning, RBS shares traded down 10 percent at 27.23 pence.