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RBS has £691m loss in first half RBS has £691m loss in first half
(10 minutes later)
Banking group RBS has posted a pre-tax loss of £691m during the first six months of 2008, the second-biggest loss in UK banking history. Royal Bank of Scotland (RBS) has posted a pre-tax loss of £691m during the first six months of 2008, the second-biggest loss in UK banking history.
RBS, the UK's second-largest bank, said it was hit by £5.9bn of write-downs after the credit crunch cut the value of many of its mortgages and assets. RBS, which owns Natwest bank, said it was hit by £5.9bn of write-downs after the credit crunch cut the value of many of its mortgages and assets.
The bank made a profit of £5bn during the same period last year.The bank made a profit of £5bn during the same period last year.
Much of the write-down total stems from investments at Dutch bank ABN Amro, bought by RBS and partners last year.Much of the write-down total stems from investments at Dutch bank ABN Amro, bought by RBS and partners last year.
Credit Crunched
RBS, along with a other UK and global banks, has suffered from a drop in the value of risky assets, particularly those linked to US sub-prime mortgages.
Sub-prime borrowers are those with poor or non-existent credit histories, and in recent months the number of defaults has jumped.
As a result, many lenders have had to find ways of boosting their cash reserves, with many deciding to sell shares to existing investors via a right issue.
RBS sold shares worth £12bn in a rights issue that was strongly supported by shareholders, who agreed to buy some 95% of the stock on offer.
The rights issue was the biggest in UK corporate history, and the firm said investors would take up 5.8bn new shares at a value of 200 pence each.
Other lenders which have also appealed to investors for extra cash including HBOS, and Bradford & Bingley.
RBS shares have more than halved in value over the past year - including a 25% slump since the rights issue was announced in April.