The Royal Bank of Scotland yesterday revealed a half-year net loss of £802 million, the second biggest in British banking history.
This was after making a £5.1 billion profit for the same period last year.
RBS, the second-biggest British bank, admitted being humbled by exposure to the subprime crisis, in its half year results statement.
The bank admitted that it had taken a £5.9 million hit from the US sub-prime crisis.
Its £802m net loss in the first six months of 2008 contrasted with a profit after tax of £3.56 billion during the equivalent period in 2007, it added.
Results before tax showed a loss of £691 million from a profit of £5.12 billion 12 months earlier.
The switch into a heavy loss was driven by the cost of writing down loans and assets by £5.9 billion because of the subprime crisis and consequent credit squeeze.
Only a year ago RBS led a $100 billion consortium takeover for Dutch bank ABN Amro.
RBS admitted that a large part of this year’s losses result from ABN Amro investments.
RBS Chief executive Fred Goodwin described the results as a ‘chastening experience’ that he and his colleagues ‘regret very much.’
Bank of Scotland said that write-downs on its ‘credit market portfolio’ totalled £5.93 billion between January and June.
Goodwin said in the statement: ‘The first half of 2008 has been as difficult an operating environment as we have encountered for some time, presenting both general and specific challenges to RBS.
‘The results we have published today demonstrate progress in a number of important areas, and it is all the more unsatisfactory, therefore, that they record a loss as a result of our credit market writedowns.’
In a bid to boost its capital, RBS had in June raised £12 billion pounds, in the biggest ever rights issue launched in Britain.
Unite trade union yesterday appealed to the bank not to sack workers in a ‘knee jerk reaction’ to the losses.
Graham Goddard, Unite Deputy General Secretary stated: ‘For a financial institution as successful as RBS to record such half year losses demonstrates the scale of the current financial crisis affecting banks and building societies.’
He claimed: ‘However the underlying operating profit of RBS and profits posted by other financial institutions, although reduced, show that British banks remain profitable and successful in the face of difficult trading conditions.’
Goddard continued: ‘RBS and other financial institutions are urged to not make knee jerk reactions in terms of jobs and to maintain staffing levels that have delivered such economic successes in the last ten years.
‘What the current crisis within the finance sector clearly demonstrates is the need for a full review and overhaul of how the sector operates.’
• Sterling yesterday slumped to a 17 month low of $1.9225, down 1.1%, while the euro hit a five month low of $1.5195.
