RBS feels recessionary pain with loss

TROUBLED banking giant The Royal Bank of Scotland continued to nurse huge credit crunch pain today as it revealed a £1bn net first half loss.

RBS, a large employer in Yorkshire, said it had been bit by £7.5bn of bad debts but reported a pre-tax profit of £15m.

The bank, which is 70% owned by the tax-payer under the Government’s rescue scheme, is in the midst of a major turnaround plan under chief executive Stephen Hester.

In April, as part of a cost-cutting drive it announced the loss of 4,500 jobs over the next two years.

RBS said today that it expects “poor” financial results for the next two years.

Mr Hester said: “Overall results may not substantially improve until 2011 and full recovery will take time.”

RBS  said its “core bank”, not including assets it hopes to sell or exit, saw operating profit improve to £6.3bn from £4.7bn a year ago.

Commercial and retail banking, however, was hit by lower revenues and margins and higher bad debts.

Profit before tax, excluding the write-down of goodwill and other intangible assets came in at £15m for the six months ended 30 June 2009 against a £726m loss last year. Total income rose 25% to £17.8bn.

RBS said it had hired former Bank of New York Mellon chief financial officer Bruce Van Saun as finance director.