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| Version 1 | Version 2 |
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| RBS has £691m loss in first half | RBS has £691m loss in first half |
| (20 minutes later) | |
| 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. | 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, 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. | 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. |
| RBS boss Fred Goodwin warned that a "deteriorating economic outlook" would compound problems in financial markets. | |
| RBS had been expected to post a much larger loss with some analysts predicting the UK's second-biggest bank could see a loss of between £1.2bn and £1.7bn. | |
| Even so, chief executive Mr Goodwin said the losses had been a "chastening experience", and that reporting a shortfall of £691m was something he and his colleagues "regret very much". | |
| Mr Goodwin warned that difficult conditions in financial markets "look set to be compounded by a deteriorating economic outlook". | |
| Much of RBS's write-down total stems from investments at Dutch bank ABN Amro, bought by RBS and partners last year. | |
| Credit Crunched | 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. | 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. | 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. | 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. | 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. | 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. |
| Referring to the current economic difficulties, Mr Goodwin said the bank had "moved decisively" and had drawn heavily on its shareholders for financial support. | |
| "We recognise that we must now deliver a level of performance that meets their expectations for the company and restores value to our shares. We are determined to do so, and this is our focus," said Mr Goodwin. | |
| Other lenders which have also appealed to investors for extra cash including HBOS, and Bradford & Bingley. | 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. | RBS shares have more than halved in value over the past year - including a 25% slump since the rights issue was announced in April. |