This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7548646.stm

The article has changed 12 times. There is an RSS feed of changes available.

Version 7 Version 8
RBS has £691m loss in first half RBS has £691m loss in first half
(19 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 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.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.
The company's shares added 2.7% to 239.25 pence in London.The company's shares added 2.7% to 239.25 pence in London.
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". Sir Fred 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". He warned that difficult conditions in financial markets "look set to be compounded by a deteriorating economic outlook".
Credit crunchedCredit crunched
Much of RBS's write-down total stems from investments at Dutch bank ABN Amro, bought by RBS and partners last year.Much of RBS's write-down total stems from investments at Dutch bank ABN Amro, bought by RBS and partners last year.
FROM THE TODAY PROGRAMME More from Today programmeFROM THE TODAY PROGRAMME More from Today programme
RBS, along with 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.RBS, along with 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.
The BBC's business editor Robert Peston said that RBS's undoing was that it had piled into toxic securities linked to the dire US sub-prime housing market - and its exposure to the poison was increased through the ABN takeover.The BBC's business editor Robert Peston said that RBS's undoing was that it had piled into toxic securities linked to the dire US sub-prime housing market - and its exposure to the poison was increased through the ABN takeover.
As a result, RBS's so-called credit market write-downs were £5.1bn - an almost "incomprehensibly" big figure.As a result, RBS's so-called credit market write-downs were £5.1bn - an almost "incomprehensibly" big figure.
Our correspondent said that this was particularly galling for the bank as the rest of its business was not doing too badly.Our correspondent said that this was particularly galling for the bank as the rest of its business was not doing too badly.
Cash boostCash boost
As a result of the problems in the US and other global financial markets, 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 of the problems in the US and other global financial markets, 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.
TOP WRITE-DOWNS Billions of dollars Citigroup 46.40Merrill Lynch 36.80UBS 36.70AIG 20.23HSBC 18.70RBS 16.50IKB 14.73Bank of America 14.60Morgan Stanley 11.70Deutsche Bank 11.40Ambac 9.22Barclays 9.20Wachovia 8.90MBIA 8.41Credit Suisse 8.13Wasington Mutual 8.10HBOS 7.50 Source: ReutersTOP WRITE-DOWNS Billions of dollars Citigroup 46.40Merrill Lynch 36.80UBS 36.70AIG 20.23HSBC 18.70RBS 16.50IKB 14.73Bank of America 14.60Morgan Stanley 11.70Deutsche Bank 11.40Ambac 9.22Barclays 9.20Wachovia 8.90MBIA 8.41Credit Suisse 8.13Wasington Mutual 8.10HBOS 7.50 Source: Reuters
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.
Following the rights issues, RBS said that its core tier 1 capital ratio, a key measure of cash and asset levels, was now 5.7%.Following the rights issues, RBS said that its core tier 1 capital ratio, a key measure of cash and asset levels, was now 5.7%.
Referring to the current economic difficulties, Mr Goodwin said the bank had "moved decisively" and had drawn heavily on its shareholders for financial support. Referring to the current economic difficulties, Sir Fred 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. "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," Sir Fred added.
'Wrong deal''Wrong deal'
Our business editor said that Mr Goodwin's comments were as close as you will ever hear to a chief executive saying that he is living on borrowed time. Our business editor said that the chief executive's comments were as close as you will ever hear to a chief executive saying that he is living on borrowed time.
Banker magazine editor Brian Caplan talks to the BBC about RBS's figuresBanker magazine editor Brian Caplan talks to the BBC about RBS's figures
He continued that Mr Goodwin was under unambiguous instruction from RBS's owners and its non-executives to fix the business, or "he would be out of the door quicker than it takes to say ABN was the wrong deal, at the wrong price, at the wrong time". He continued that Sir Fred was under unambiguous instruction from RBS's owners and its non-executives to fix the business, or "he would be out of the door quicker than it takes to say 'ABN was the wrong deal, at the wrong price, at the wrong time'".
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.
Are you a RBS shareholder or customer? How will the drop in profits affect you? Send us your comments using the form below.Are you a RBS shareholder or customer? How will the drop in profits affect you? Send us your comments using the form below.
Name
 Name