RBS reports losses

Part-nationalised lender Royal Bank of Scotland fell to a small first-quarter loss after bad debts quadrupled and it took another £2.1 billion writedown on risky assets.

Britain's second biggest by market value, now 70 per cent owned by the government, reported a first-quarter loss of £44 million, compared with a £479 million profit a year ago.

Bad debts in the three months to March soared to £2.9 billion from £656 million a year ago as corporate and retail impairments jumped after "building since last year fell across all businesses and sectors," RBS said Friday.

RBS was the latest big European bank to say bad debts were ratcheting up as economies worsened and unemployment rose.

"We expect credit conditions to continue to deteriorate over the next few quarters consistent with these trends, and that there will be a slowdown in financial market activity compared with the very buoyant conditions seen in Q1," said Stephen Hester, chief executive since November.

Hester said he continued to restructure and manage the bank "in the full expectation that both 2009 and 2010 will be very tough years for RBS".

The writedown on credit market exposures was mainly due to a deterioration in the outlook for monoline insurers, it said.

Profits at its investment bank arm jumped 97 per cent to £2 billion, but profit in retail banking slumped 63 percent to £172 million and US retail and commercial banking swung to a 98 million loss.