RBS shares slump three per cent

Royal Bank of Scotland shares have slumped by three per cent after it warned plans for an internal 'bad bank' with £38 billion of toxic loans will result in a substantial loss this year.

The bank had been threatened with a carve-up and nationalisation of its problem loans in a Treasury review, but will instead run down the assets at a faster rate..

The move means up to £4.5 billion to be written off in its balance sheet in the current financial year, causing shares to fall 12.9p to 354.7p.

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RBS avoids 'bad bank' split

Royal Bank of Scotland today reported a sharp fall in operating profits to £438 million for the third quarter, from £909 million a year earlier. The bank is also to create an internal 'bad bank' with £38bn of problem assets, avoiding a full split.