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| Version 3 | Version 4 |
|---|---|
| RBS set to report record UK loss | RBS set to report record UK loss |
| (about 1 hour later) | |
| Royal Bank of Scotland is heading for a record UK loss after saying it expects to report a deficit before write-downs of between £7bn and £8bn for 2008. | Royal Bank of Scotland is heading for a record UK loss after saying it expects to report a deficit before write-downs of between £7bn and £8bn for 2008. |
| RBS also expects to write down assets, largely related to its takeover of ABN Amro in 2007, of up to £20bn in 2007. | RBS also expects to write down assets, largely related to its takeover of ABN Amro in 2007, of up to £20bn in 2007. |
| This means RBS's final deficit is set to beat the current record UK loss of £15bn, reported by Vodafone in 2006. | This means RBS's final deficit is set to beat the current record UK loss of £15bn, reported by Vodafone in 2006. |
| The Treasury has also swapped £5bn of preference shares for ordinary shares, taking its stake in RBS to nearly 70%. | The Treasury has also swapped £5bn of preference shares for ordinary shares, taking its stake in RBS to nearly 70%. |
| Shares in RBS dropped more than 20% in morning trading. | |
| 'Ill-timed' takeover | |
| RECENT FINANCIAL RESULTS Fourth-quarter 2008 results Citigroup: $8.3bn (£5.7bn) lossBank of America: $1.7bn lossDeutsche Bank: Estimated $6.4bn loss (4.8bn euros; £4.4bn)JP Morgan Chase: $702m profit Source: Company statements | |
| "Credit and market conditions in the fourth quarter of 2008 were particularly challenging," RBS said in a trading update. | "Credit and market conditions in the fourth quarter of 2008 were particularly challenging," RBS said in a trading update. |
| RBS led a consortium, which also included Dutch bank Fortis and Spain's Santander, that bought ABN Amro in 2007. | 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". | BBC business editor Robert Peston said that the acquisition "must now rank as one of the worst and most ill-timed takeovers in history". |
| But he also added: "No one should fear, however, that this is a bust bank." | But he also added: "No one should fear, however, that this is a bust bank." |
| Shares swap | Shares swap |
| 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 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. |
| 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 Financial jargon explained | 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 Financial jargon explained |
| The government invested in both types of shares in RBS, Lloyds TSB and HBOS as part of its £37bn bail-out last October, bringing its stake in RBS to 58%. | The government invested in both types of shares in RBS, Lloyds TSB and HBOS as part of its £37bn bail-out last October, bringing its stake in RBS to 58%. |
| But the banks have complained that the commitment to pay such a large dividend, regardless of their profit levels, is prohibitive. | But the banks have complained that the commitment to pay such a large dividend, regardless of their profit levels, is prohibitive. |
| Chancellor Alistair Darling said banks would not be legally obliged to lend to companies and individuals as part of a new multi-billion package to restore confidence in the British banking industry. | Chancellor Alistair Darling said banks would not be legally obliged to lend to companies and individuals as part of a new multi-billion package to restore confidence in the British banking industry. |
| "We have taken a greater shareholding in that bank [RBS] but what we said in return is you've got to lend about £6bn more to businesses, to people and the RBS group have agreed to that," he said. | "We have taken a greater shareholding in that bank [RBS] but what we said in return is you've got to lend about £6bn more to businesses, to people and the RBS group have agreed to that," he said. |