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| Version 1 | Version 2 |
|---|---|
| RBS in £1.25bn credit crunch hit | RBS in £1.25bn credit crunch hit |
| (20 minutes later) | |
| Royal Bank of Scotland (RBS) has warned it expects to write off about £1.25bn because of its exposure to bad debts in the US sub-prime loans market. | Royal Bank of Scotland (RBS) has warned it expects to write off about £1.25bn because of its exposure to bad debts in the US sub-prime loans market. |
| About £300m of the loss relates to the exposure to the US of Dutch bank ABN Amro, which it bought in October. | About £300m of the loss relates to the exposure to the US of Dutch bank ABN Amro, which it bought in October. |
| But the hit is less than many had expected and RBS said its 2007 profits would beat analysts' forecasts. | But the hit is less than many had expected and RBS said its 2007 profits would beat analysts' forecasts. |
| Rising mortgage defaults and falling US house prices have meant loans bought by banks are worth less than thought. | Rising mortgage defaults and falling US house prices have meant loans bought by banks are worth less than thought. |
| Deposits surge | Deposits surge |
| RBS added that its integration with ABN since its 71bn-euro ($98.5bn; £49bn) takeover was "progressing well" and that the benefits were set to be "somewhat greater than anticipated". | RBS added that its integration with ABN since its 71bn-euro ($98.5bn; £49bn) takeover was "progressing well" and that the benefits were set to be "somewhat greater than anticipated". |
| The deal, completed in October after a bidding war with Barclays, was Europe's biggest banking takeover to date. | The deal, completed in October after a bidding war with Barclays, was Europe's biggest banking takeover to date. |
| RBS also revealed that deposits had grown rapidly in the second half of the year as savers abandoned the stricken Northern Rock bank and looked to put their money elsewhere. | RBS also revealed that deposits had grown rapidly in the second half of the year as savers abandoned the stricken Northern Rock bank and looked to put their money elsewhere. |
| In a trading update, the UK's second largest bank said that it had been able to offset a further £250m of losses amid the credit turmoil by drawing on cash reserves. | In a trading update, the UK's second largest bank said that it had been able to offset a further £250m of losses amid the credit turmoil by drawing on cash reserves. |
| This was much cheaper than being forced to borrow from the more expensive wholesale credit market. | This was much cheaper than being forced to borrow from the more expensive wholesale credit market. |
| And it said that while growth at its investment bank arm had slowed, it was set to report good profit growth for 2007. | And it said that while growth at its investment bank arm had slowed, it was set to report good profit growth for 2007. |
| In early trade, RBS shares were up 36.75p, nearly 8%, at 502.5p. |