London: Royal Bank of Scotland shares plunged almost 70% on Tuesday after it forecast an annual loss of up to £28 billion — a record in British corporate history — due to the credit crisis and its part in the costly and mis-timed takeover of Dutch lender ABN Amro.
Shares in the bank, majority of which is owned by the British government, crashed 66.57% to close at 11.60 pence on London’s FTSE 100 index, which finished 0.93% lower.
Other banks also fell sharply, with the newly-created Lloyds Banking Group slumping 33.94% to 65 pence despite news of another government banking-sector rescue package worth tens of billions of pounds.
“Credit and market conditions in the fourth quarter of 2008 were particularly challenging and RBS estimates the group will report for full year 2008 an attributable loss, before exceptional goodwill impairments, of between £7 and £8 billion,” RBS said in a trading update.
“The group is currently reviewing the carrying value of goodwill and other purchased intangibles on its balance sheet as part of the finalisation of the year end results. Preliminary findings indicate an estimated impairment charge in the region of approximately £15 to £20 billion,” it said.
The additional losses are largely linked to the value of RBS assets secured after a consortium of which it was a part took over Dutch banking group ABN Amro in 2007.