RBS results could spark disposals

by Gill Montia

Story link: RBS results could spark disposals

Royal Bank of Scotland (RBS) is expected to write down over £1 billion in US sub-prime-related losses, when it reports its full-year results on Thursday of this week.

At the same time, the bank is expected to increase its dividend in an attempt to calm fears about its capital ratio, that is its ratio of indebtedness to liquid assets.

This is currently thought to be the lowest of any bank in Europe because of last year’s acquisition by RBS of the Dutch bank, ABN Amro.

Some analysts are expecting RBS to begin a programme of disposals that could include Angel Trains and Condor Ferries.

This would provide an opportunity for the bank to shore up its capital ratio without a rights issue.

A recent research note issued by Credit Suisse stated that: “Investors will rightly want to know how RBS plans to boost its capital position and it would not surprise us if certain asset disposals were announced around the time of the numbers.”

In December, RBS forecast that it would write down £950 million in connection with US sub-prime mortgage-related assets, and £250 million on its leveraged finance business.

The figures could increase because credit markets have continued to deteriorate since the beginning of the year.

Meanwhile, RBS is reported to be working with a group of banks to put together a rescue plan for Ambac, the bonds insurer that is in danger of losing its AAA credit rating.