The Royal Bank of Scotland group, the UK’s second largest banking organisation, added Dutch bank ABN Amro to its operating portfolio last year, alongside the previous purchase of Natwest(www.natwest.com). RBS posted profits of £9.9 billion for 2007 compared with £9.2 billion the year before.
RBS profits would be more considerable had it not been for credit crunch losses totalling £1.16 billion, and ABN Amro investment write-offs totalling £978 million.
A spokesperson for RBS expressed disappointment at last year’s figures:
‘These results have been held back by the second half credit market deterioration, which led our Global Banking & Markets division to incur writedowns on its US mortgage-related and leveraged finance exposures.’
RBS had already given warning that it expected to write off about £1.25 billion due to its exposure to bad debts in the US home loans market. Rising mortgage defaults and falling US house prices have meant loans bought by banks are worth less than originally thought.
Chris Eagle, Commercial Manager at CreditChoices, can see two sides to this particular story:
‘On the one hand, RBS can be disappointed with results that have been badly affected by the credit slowdown towards the latter stages of last year. On the other, RBS were in profit, an accolade that Barclays(www.barclays.co.uk), Lloyds, Halifax and Alliance and Leicester could only dream of. The investments in customer service at Natwest branches and in call centres may have given them the edge last year.’
