RBS to create internal bad bank

Chisel Split Ice

Royal Bank of Scotland expects to post a 'substantial' full-year loss after transferring $61bn of its worst loans to an internal bad bank under government pressure.

RBS will deal decisively with the problems of the past by separating out the good from the bad', Osborne said in a statement. 'It means less exposure for the British taxpayer'.

But not everyone agrees this is the best approach. Bloomberg News quotes Ian Gordon, an analyst at Investec in London, who said:

'We may have avoided the worst excesses of a full blown good-bank/bad-bank split but you are getting a lot of the medicine in the form of accelerated loss recognition as assets are manged for speed and not value. A lot of shareholder value is being destroyed'.

'In light of the new strategy to deal with our high risk assets we expect a significant increase in impairments in the fourth quarter', CEO Ross McEwan, 56, said in a statement. That 'is likely to result in the group reporting a substantial loss for the full year'.

Hit the link below to access the complete Bloomberg article:

RBS to Create Internal Bad Bank as Quarterly Loss Narrows

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