RBS records losses of over £2bn
Updated on 06 November 2009
The mostly state owned Royal Bank of Scotland has halved its losses in the last three months, but its chief executive says the bank's recovery is "a marathon, not a sprint".
RBS posted a pre-tax loss of £2.2bn for the July to September period.
It has also written off another £3.3bn in bad debts and other bad investments. It says conditions remain "fragile".
RBS has already eaten through nearly half the £60bn "excess" on toxic debts insured by the taxpayer, it emerged today.
The bank agreed this week to put £282bn in bad loans into the Asset Protection Scheme, under which it shoulders the first £60bn in losses on the debts.
But third-quarter results released today showed RBS, which will be 84 per cent state-owned under the terms of the APS - used £26.6bn of the buffer by the end of June.
A further £3.2bn in loan losses announced for the third quarter - mostly on APS assets - is likely to take RBS's "first loss" close to £30bn.
The bank has been dragged into the red by continuing credit losses in parts of the business it is winding down or selling, although bad debt charges are stabilising.
The taxpayer is liable for 90 per cent of any hit above the £60bn under the APS although the recent tentative signs of improvement make losses less likely.
RBS is taking a bigger first loss than originally planned under the APS in return for a smaller fee.
Chief executive, Stephen Hester, who hopes to return the bank to profit in 2011, said today he was "upbeat but realistic" about the tough road ahead for RBS.
The bank said bad debts were "plateauing" but Mr Hester warned: "We owe it to everyone to be realistic and transparent."
He said: "Economic recovery is likely to be slow and the pain of economic adjustment will take years to subside. Our business will reflect these issues.
"Profitability in our core businesses will recover fully only when our own actions are also complemented by more normal interest rates and bad debt experience."
