Royal Bank of Scotland said this morning that it expects a loss of £28 billion, that’s $41.29 billion for those of you playing at home.The losses arise in large part thanks to the success of RBS in its bid for ABN Amro just ahead of the credit crisis.The banks is getting new capital from the government, raising the UK government’s stake to 70%.
From the Financial Times:
“Almost all their losses are in subprime mortgages in America and related to the acquisition of ABN Amro. These are irresponsible risks taken by the bank with people’s money in the UK,” Mr Brown said, adding that the decision to buy ABN “was wrong”.
The outburst from Mr Brown came as the Treasury agreed to replace the £5bn in RBS preference shares held by the government since the October bailout with ordinary stock. This will increase government ownership to almost 70 per cent.
Shares in RBS fell 20.1p or nearly 60 per cent to 14.6p, valuing the bank’s capital at less than £6bn, as investors feared the bank may be fully nationalised.
Stephen Hester, chief executive of RBS, said that full nationalisation was something that was discussed over the weekend with the government but it was “something we all wished to avoid.”