RBS first-half losses could hit £1.2bn

by Gill Montia

Story link: RBS first-half losses could hit £1.2bn

This week, Royal Bank of Scotland (RBS) is expected to report first-half losses of £1.2 billion.

The result will compare with an 11% increase in profit, to a record £5.1 billion, in the first six months of 2007.

According to a poll of analysts carried out by Reuters, the group is likely to post the biggest loss in UK banking history, as it writes down £5.9 billion in relation to the credit crisis.

A blow of these proportions would be cushioned by RBS’s successful £12 billion fundraising in June, however the bank’s programme of disposals, which aims to raise a further £4 billion, would take on a new significance.

RBS is reported to be in negotiations with Allstate about a sale of its insurance business, which includes Direct Line and Churchill.

Zurich Financial Services dropped out of the bidding recently and it is doubtful that the £7 billion asking price will be achieved.

The group is also in the process of selling the Australian finance business it acquired last year when it led the consortium that bought Dutch Bank, ABN Amro.

Last week, HBOS, Lloyds TSB and Alliance & Leicester all reported dramatic falls in first-half profit.

In the case of Alliance & Leicester, the year-on-year decline was an astonishing 99%.