RBS shares plunge on record loss and fears of nationalisation
SHARES in Royal Bank of Scotland slumped 66% today on fears that it will be the next to be nationalised after saying it would post a record loss of £28bn.
The high street giant and owner of NatWest plunged 66% to just 11.7p as investors took alarm over the scale of the losses.
The bank’s shares are now worth 98.3 per cent less than their peak of 607p in February 2007
Prime Minister Gordon Brown, unveiling a fresh package to stimulate lending activity among the banks, said he was “very angry” at the scale of RBS’ losses.
RBS said it would make a loss of between £7bn and £8bn this year, before a huge goodwill impairment charge of between £15bn to £20bn on its acquisition of Dutch bank ABN AMRO in 2007.
The bank, which employs nearly 10,000 people in Greater Manchester, where it has its North of England headquarters, was also left short of capital following hefty write-offs against debt-backed securities.
Prime Minister Gordon Brown today announced a scheme to allow banks to exchange cash or shares for a Government guarantee on their “toxic” debts, transferring any losses they suffer from the banks to the taxpayer.
The Government conceded that it can’t estimate how much taxpayers’ money will be on the line in the latest bank assistance package, which comes less than six months after the first £500bn bail-out.
RBS’ loss is the largest corporate loss ever in the UK, dwarfing a £15bn loss declared by Vodafone three years ago.
In October, the Government injected £37bn into RBS, Lloyds TSB and HBOS, and pledged £450bn to guarantee banks’ debt and enhance the special liquidity scheme (SLS) to make funding easier.
Stephen Hester, chief executive at RBS said: “The world remains an uncertain place. We can all be sure there will be future significant credit losses but we can’t be sure of what amount and what timing…all banks are facing uncertainties.”
