RBS Says Performance On Track

Tom Burroughes

11 June 2008

Royal Bank of Scotland which owns the UK private bank Coutts, said it expects its performance to remain on track with the guidance it gave in April this year, although it said the deterioration in credit markets had held back its progress.

“Overall, the group’s underlying results, excluding write-downs on credit market exposures, are expected to remain satisfactory,” RBS said in a statement.

“While the global economic outlook is placing strains on a number of business sectors, the group’s loan portfolio remains robust, with a continued reduction in UK personal sector impairment losses but increased US impairments, principally in a specific retail portfolio, as previously disclosed,” it said.

RBS, which bought the Dutch bank ABN Amro last year in a consortium of buyers along with Spanish bank Santander and European bank Fortis, said the integration of ABN Amro was “on track”. “Good progress continues to be made, with both income benefits and cost savings slightly ahead of target,” RBS said.

RBS confirmed its previous guidance that at 30 June 2008, it expects its Tier 1 capital ratio to be in excess of 7.5 per cent. The ratio is a key measure of a bank’s financial strength. At 31 December 2008 the Group’s Tier 1 capital ratio, on the same basis, is expected to be in excess of 8 per cent.

Earlier this week, RBS said it achieved strong demand for its £12 billion ($23.73 billion) capital-raising. The rights issue has prompted some investors to complain that Sir Fred Goodwin, RBS chief executive, had made a U-turn in the bank’s policy.