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| RBS says 'bad loan' losses will be 'significantly' lower | RBS says 'bad loan' losses will be 'significantly' lower |
| (about 1 hour later) | |
| Royal Bank of Scotland says an improving economy means losses from bad loans should be "significantly lower" than the £1bn it had expected for 2014. | Royal Bank of Scotland says an improving economy means losses from bad loans should be "significantly lower" than the £1bn it had expected for 2014. |
| The improvement means the bank can free up £800m from the pot of money it has set aside to cover the losses, it said. | The improvement means the bank can free up £800m from the pot of money it has set aside to cover the losses, it said. |
| Of this, £500m will come from its "bad bank", which holds the assets it no longer wants, and £300m will come from its Irish Ulster Bank division. | Of this, £500m will come from its "bad bank", which holds the assets it no longer wants, and £300m will come from its Irish Ulster Bank division. |
| State-owned RBS said the money would be released in its third quarter. | State-owned RBS said the money would be released in its third quarter. |
| It share price rose 3.8% in early morning trading following the positive statement. | |
| However, in its trading update, RBS also said revenues in its corporate and institutional banking unit had been weaker than expected over the period. | |
| Balancing the books | |
| RBS, which is 80%-owned by the UK taxpayer, has been trying to reduce its debt mountain and strengthen its balance sheet after the government bail-out in 2008. | |
| This has entailed offloading non-core businesses, such as Angel Trains, a stake in Bank of China, its factoring business and most recently, a stake in its US banking subsidiary Citizen Financial Group. | |
| The 25% sale of Citizens should raise about £1.8bn for RBS when the shares begin trading on the New York Stock Exchange on Wednesday, and the bank plans to sell its entire stake by 2016. | |
| RBS set up its Capital Resolution division - the formal name for the "bad bank" - this year to sell off or run down about £29bn of assets it no longer wants. | |
| In July, RBS's shares jumped after it said operating pre-tax profits had doubled £2.6bn for the first half of the year - a much stronger performance than analysts had been expecting. | |
| RBS will release its third quarter results on 31 October. |