RBS losses to 'hit £30 billion'
Losses at stricken Royal Bank of Scotland could be even worse than indicated a few weeks ago.
Now there is talk that the group's results, due next week, could reveal losses spiralling to £30 billion as the UK economy slides into ever deeper recession.RBS' loan book may now be deteriorating as fast as that of HBOS. .
Worries over deepening losses at RBS sent shares in the bank tumbling11 per cent this morning to just 18.4p. The group's results together with an emergency statement could be brought forward in the next few days. This suggests the prospect of outright 100 per cent nationalisation has moved perceptibly closer.
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The bank is reported to be struggling to find a way to pay for the government's proposed insurance scheme because the scale of its toxic losses means that it could face a bill of up to £8 billion.
The bank warned last month that it had suffered £8 billion of losses in 2008 and that it would also write off about £20 billion on goodwill from the ABN deal.
These figures are thought to have deteriorated further and RBS's losses could top £30 billion.
The latest crisis at RBS is part of a bigger picture of a continuing deterioration in financial confidence both in the UK and worldwide in recent days. The spectre of a deep global depression has moved perceptibly closer this week.
Shares in Legal & General, Europe's largest life and pensions group, slumped another eight per cent to 41.5p on fears that extra provisions against its corporate bond book may not be big enough to meet a growing spate of defaults.
These worries are compounded by deepening worries over prospects in Asian, Eastern Europe and the former Soviet bloc. This morning the Russian rouble fell two per cent against the dollar and euro as oil prices continued to slide and confidence in the economy weakened further.
Today Germany has unveiled new legislation designed to nationalise stricken banks and "as a last resort" expropriate shareholders. German banks are heavily exposed to Eastern Europe.
As the price of crude oil in New York sank below $35 a barrel, Russian stocks entered a tailspin. Stock indexes earlier this week fell by 9 percent, triggering halts on the exchanges.In January, Russia’s industrial output dropped 16 percent from a year earlier, while car production plunged a massive 80 percent.
And on Wall Street shares slumped heavily again last night on mounting concern that the Obama $800 billion fiscal package may be unable to halt a collapse into Depression.
