Payment protection claims and Greek and Irish writedowns contribute to overall loss
ROYAL Bank of Scotland has posted a first half loss of £1.43 billion mainly due to Greek bond losses and provisions for mis-sold loan insurance.
The 84-per cent taxpayer-owned bank's losses for the six months to June 30 include an impairment charge of £733 million gross on its £1.9 billion Greek bond exposure.
RBS has also allocated £850 million to cover claims for mis-selling payment protection insurance (PPI).
The bank is also setting aside £1.25 billion to cover yet more losses at its Ulster Bank operation.
Ulster Bank, which accounts for 10 per cent of the group's total customer loans, posted a first half impairment of £2.54 billion compared to £1.7 billion in June last year.
Royal Banks' Global Restructuring Group - which deals with lending problems and debt recovery - posted a 15 per cent rise in the value of its commercial property loan book to £39.5 billion compared to £34.4 billion at the end of December.
And the group's investment arm - Global Banking and Markets - posted a first half revenue drop of 35 per cent overall and a 44 per cent drop in the three months to June 30.
Today RBS confirmed it was shedding 2,000 staff from its investment banking division.
The bank said core operating profit - the operations the bank intends to keep - for the half year to June 30 was £1.87 billion compared to £1.13 billion at the half year point in 2010.
However there are still £113 billion of non-core assets to offload with first half losses from that division hitting £1.89 billion.
Toxic assets held in the government's asset protection scheme stand at £167.7 billion with RBS paying £637 million in fees for the scheme the first half of 2011.
Stephen Hester, group chief executive, said he was pleased with progress of the bank's strategic plan as it looks to reduce its balance sheet.
He said: "The run-down of Non-Core assets is ahead of schedule and 60 per cent below our starting point.
"Service to customers remains at the heart of our mission. It is even more important with economic recovery slower than had been hoped for which will also affect the speed of our own recovery.
"However, the Banks principal businesses remain solidly profitable, though results in GBM have been impacted by difficult markets."
RBS said it lent s44.2 billion to UK businesses in the first half, which includes £15.5 billion of loans to small businesses.
The bank insists this was new lending, as opposed to renegotiating existing loans, but added there are are no published documents in existence confirming this in relation to the Treasury's lending agreement enshrined in Project Merlin.
RBS does not breakdown lending figures in new or renewed lending.
The UK's top five banks, which includes RBS, Lloyds, HSBC, Barclays and Santander UK, said today they are now on track to meet the government's set lending targets to business enshrined in the Project Merlin deal.
The British Bankers Association said UK banks had lent s100.4 billion in gross new lending to business in the first half of the year, including £37.4 billion to small businesses.
However in May, the Bank of England said the banks had fallen short of lending targets in the first quarter of the year, though the Treasury said today lending to business rose 20 per cent in the second quarter.