RBS announces £24bn annual loss

Royal Bank of Scotland Plc (RBS) it suffered a huge loss in the financial year ended December 2008, partly due to costs related to its ill-timed acquisition of Dutch bank ABN Amro in 2007. The beleaguered British bank slumped to a 2008 net loss of £24.1bn (US$34.2bn) as against a net profit of £7.3bn in 2007. The loss included a £16.2bn write-down of goodwill and other intangible assets, as well as impairment charges of £8.1bn. The loss was still smaller than the £28bn loss predicted by the bank. RBS announced a sweeping restructure that will move £240bn of assets into a non-core division, which will then be sold off or run down. It is also planning to cut more than £2.5bn from its cost and sharply reduce the amount of capital allocated to its global banking and markets unit.

The bank said it is participating in UK asset protection scheme and will raise £13bn new capital as part of the scheme. The biggest bank controlled by the UK government said it will insure £325bn (US$462bn) of assets with a new state guarantee program. Under the government backed insurance scheme designed to extend another lifeline to banks, RBS will be responsible for the first £19.5bn of losses - or 6% of the asset value. The British government will bear 90% of any losses after that, and RBS incurs the remaining 10%.