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RBS unveils further write-downs RBS expects to report 2008 loss
(30 minutes later)
Royal Bank of Scotland has unveiled further write-downs on assets hit by the credit crunch. Royal Bank of Scotland has signalled it expects to make a loss this financial year as it unveiled further write-downs on assets hit by the credit crisis.
The beleaguered lender said bad debt charges and write-downs totalled £206m in the third quarter, on top of £5.9bn in the first half of the year.The beleaguered lender said bad debt charges and write-downs totalled £206m in the third quarter, on top of £5.9bn in the first half of the year.
The write-downs were less than some expected and were also lowered by accounting changes. RBS boss Stephen Hester told BBC News making a profit would prove difficult.
RBS also detailed plans to raise up to £19.7bn as part of the government's bank bail-out plan.RBS also detailed plans to raise up to £19.7bn as part of the government's bank bail-out plan.
The firm said its operating profit in the first nine months of 2008, before credit market write-downs, was 8% lower than a year earlier.
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"The scale of the market disruption and the economic downturn that is happening... means that credit losses are rising very sharply," Mr Hester said.
"I suspect that people may conclude that profits will be difficult this year," he added.
The firm reported in August a loss for the first half of the financial year of £691m.
Cash plan
RBS said it wants to raise up to £15bn from investors by selling shares at 65.5p each. If the shares are not taken up, the government will acquire them.
The government will also directly buy preference shares in the bank - worth a total of £5bn.
Under the terms of the government agreement, dividend payouts are restricted, directors' pay limited and banks are required to pay 12% a year interest on the shares.
RBS said it would buy back the preference shares "as soon as it is prudent to do so", which would allow it to restart dividend payments.
Lloyds TSB and HBOS are also taking part in the government bank rescue plan whereas Barclays has raised cash from the Middle East.
RBS's third quarter write-down was less than some expected, partly due to accounting changes.