RBS bank reports losses of £2.2 bn

Royal Bank of Scotland Group, which is majority- owned by taxpayers,
has reported a pre-tax loss of £2.2 bn for the July to September
period. It compares with a profit of £1.9 bn in the same period last
year. RBS has written off another £3.3 bn in bad debts and other bad
investments, which is down from the £4.7 bn it wrote off in the
previous three months. The bank said although conditions had improved
in the past three months they "remain fragile". It predicted that the
number of companies failing, and the number of people out of work,
would not peak until next year. RBS chief executive Stephen Hester
told the BBC that the bank's recovery "would be a marathon not a
sprint" and that he expected losses until well into next year. By
mid-morning, shares were up more than 7 %. Higher lending On the
subject of bonuses, Mr Hester said everyone at the bank was treading
a "very delicate tightrope". ANALYSIS Hugh Pym, BBC chief economics
correspondent The picture on business lending is patchy. RBS says it
has increased lending to small businesses during the third quarter of
this year compared with the previous quarter. But if you look at
total business lending over the full year to date it has actually
fallen a bit. This might add weight to the criticism that tax payer
owned banks are still not doing enough to help businesses raise
funding to take them out of the recession. But, RBS says there is a
trend for companies and households in the UK and the US to opt for
debt repayment rather than new borrowing. It says it has £27 bn of
credit lines on offer to companies which have not been taken up. The
debate over whether people and companies don't want to borrow or
whether banks don't want to lend is still unresolved. He said the
bank was leading the way on pay within the government constraints,
but he added it was necessary that RBS kept the best people in order
to return the bank to profitability. RBS said it had increased lending
to small businesses in the past three months and also extended £27
bn of credit lines to small and medium businesses, which had not been
taken up. It added its core banking activities had made an operating
profit of £1.2 bn. Uncertain future Tower Group's banking analyst,
Ralph Silva, says that RBS's loan book seems to be suffering more
than its competitors. "While they are still showing solid numbers for
retail banking, they are struggling with their investment and
corporate banking operations," he said. "It appears that businesses
that have to buy banking products are not happy with the uncertainty
around the banks future. " Earlier in the week, it was announced that
RBS is to be forced by the European Commission to sell parts of its
business It will sell RBS branches - originally under the Williams &
Glyn's brand - in England and Wales, as well as the NatWest brand in
Scotland, RBS Insurance, and its card payment business, Global
Merchant Services. It also plans to put £282 bn of its assets into the
government's insurance scheme for toxic assets, which will take the
government's stake in RBS to 84 %. It is already 70 % owned by the
taxpayer.