RBS apologises after reporting £691m loss

RBS apologises after reporting £691m loss

Royal Bank of Scotland's top management apologised today after heavy credit crunch hits forced the chastened bank to report the first loss in its 40-year history as a public company.

Sir Fred Goodwin, the embattled RBS chief executive, admitted to being "disappointed ...numbed and ...galvanised" by the near £700m loss, one of the biggest in British banking history.

"It has been a chastening experience and reporting a loss is something I and my colleagues regret very much," ­Goodwin said.

Profits of £5.1bn in the first six months of last year were eradicated by the £5.9bn of credit crunch write-downs which are expected to be accrued since the bank's £12bn rights issue in April. The pre-tax loss was £691m.

Sir Tom McKillop, the bank's chairman, issued a rare apology to shareholders who have watched the value of their holdings lose more than 70% from last year's peak to this year's trough.

"We are deeply disappointed to be announcing these results and apologise for the pain this has caused our shareholders," McKillop said.

Shareholders backed the £12bn rights issue, which was needed to rebuild regulatory capital ratios battered by the 200p-a-share takeover of Dutch bank ABN Amro last year.

The shares ended today 3% higher at 240.5p as the loss was not as great as the £1.2bn forecast because the bank's underlying profits held up better than expected at £5.1bn – down 3%.

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shareholders are calling on the RBS board to make management changes and are determined to ensure ­executive bonuses are restrained.

Legal & General, one of the biggest City investors, has added to the pressure by ­saying Goodwin and McKillop have "a lot to answer for".

McKillop refused to comment on L&G's remarks but insisted "everyone is focused on driving the business forward" and taking action to restore the bank's share price.

McKillop has promised to bolster the bank's board with the appointment of three new non-executive directors whose names are expected to be announced soon.

Goodwin, who played a crucial role during RBS's historic takeover of NatWest, defended his credentials. "We're in the middle of a financial markets crisis… the industry is in a tight place, and as a major participant in the industry we are in a tight place. We are not alone in ­having taken write-downs.

"I won't do this job for ever but right now you will find me extremely ­galvanised to do the task at hand," he said.

The bank admitted it was preparing itself for a UK economic performance even worse than forecasts which predict a mere 1.5% rise in GDP.

The charge for customers failing to pay their debts on time rose by £543m to £1.5bn. But, in the UK, where the bank's net mortgage market share jumped from 2% to 17%, the so-called impairment charge dropped by £50m from more cautious lending.

There was a near fourfold increase in impairments in the US operation, where profits fell by 42% to £368m.

Profits in the investment banking arm were all but wiped out, standing at just £31m.

There was no news on the proposed sale of the Churchill and Direct Line insurance arm which reported a 56% rise in profits to £403m.