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| RBS says 2008 loss could hit £8bn | RBS says 2008 loss could hit £8bn |
| (10 minutes later) | |
| Royal Bank of Scotland (RBS) has said it expects to report a loss of between £7bn and £8bn for 2008. | Royal Bank of Scotland (RBS) has said it expects to report a loss of between £7bn and £8bn for 2008. |
| The loss does not include any write-downs on the value of its acquisition of ABN Amro. | The loss does not include any write-downs on the value of its acquisition of ABN Amro. |
| RBS also said it had agreed with the Treasury to swap the £5bn of preference shares the government holds for new ordinary shares. | RBS also said it had agreed with the Treasury to swap the £5bn of preference shares the government holds for new ordinary shares. |
| This will mean the government's stake in the bank will increase from 58% to nearly 70%. | This will mean the government's stake in the bank will increase from 58% to nearly 70%. |
| No one should fear, however, that this is a bust bank Robert Peston, BBC business editor Read Robert Peston's blog | |
| "Credit and market conditions in the fourth quarter of 2008 were particularly challenging," RBS said in a trading update. | |
| The bank said it was still assessing a goodwill impairment charge, expecting it to be between £15bn and £20bn, largely related to the acquisition of ABN Amro. | |
| RBS led a consortium, which also included Dutch bank Fortis and Spain's Santander, that bought ABN Amro in 2007. | |
| BBC business editor Robert Peston said that the acquisition "must now rank as one of the worst and most ill-timed takeovers in history". | |
| Shares swap | |
| SHARE DIFFERENCES Ordinary shares - give you voting rights at general meetings, and pay a variable dividend depending on profitsPreference shares - give you no voting rights, but pay a fixed dividend irrespective of profits | |
| The agreement to swap preference shares for new ordinary shares will stop RBS having to pay the 12% fixed dividend that preference shares attract - worth £600m per year - and could allow it to increase lending. | |
| The government invested in both types of shares in RBS, Lloyds TSB and HBOS as part of its £37bn bail-out last October. | |
| But the banks have complained that the commitment to pay such a large dividend, regardless of their profit levels, is prohibitive. |