RBS Problems
Yesterday, RBS revealed that its losses for the full year could reach as much as £28 billion, the biggest-ever loss in UK corporate history, mainly due to charges related to its acquisition of ABN Amro, the Dutch bank, last year.
The Government, which has already injected £20 billion into the bank, is set to sink a further £5 billion of taxpayers’ money into RBS to increase its stake from 58 per cent to 70 per cent.
Speculation gathered pace that the bank will soon be fully nationalised, joining the state-owned Northern Rock, as Stephen Hester, the new chief executive who took over last year from Sir Fred Goodwin, who masterminded the ABN Amro deal, admitted that the bank may suffer more write-downs.
This morning, Barclays, which has so far resisted Government funding, saw its shares rise 3.52 per cent to 91.1p. Lloyds Banking Group, which is the new name for the merged Lloyds TSB and HBOS, rose 1.69 per cent to 66.1p.
The Prime Minister was furious that British taxpayers were now having to pay for losses that were incurred on foreign investments.
“Almost all their losses are in the sub-prime markets in America and related to the acquisition of the bank ABN Amro,” he said. “And these are irresponsible risks which were taken by a bank with people’s money in the United Kingdom.”