RBS (The Royal Bank of Scotland ) Has Record Loss Of £28 billion

After hearing the news that the Halifax Bank of Scotland (HBOS) is proving to be the Lloyd’s Banking Group Albatross, you might not be surprised to see that the other UK banking shoe is falling, if you don’t mind the mixed metaphor. 

We now see that RBS is to sell off £300bn worth of assets.

RBS (RBS) is set to embark on a major restructure which will see it sell off at least 20% of its business worth around £300 billion.  The bank is due to announce its full-year results on Thursday and is expected to report a £28 billion loss – setting a record in UK corporate history.  Newly-appointed chief executive, Stephen Hester, is to unveil details of the plans this week, which will also see the bank split into a “good bank” and “bad bank”.

RBS is almost 70% owned by the taxpayer and received an injection of £20 billion last autumn to prevent it from collapse.

It is no surprise to see that the UK PM Gordon Brown calls for a return to prudent banking.

Prime Minister Gordon Brown called on Sunday for a return to traditional savings and mortgage banking in Britain as he prepares to insure banks against billions of pounds of toxic assets. He has asked the Financial Services Authority watchdog to look into how it should control new mortgages for more than 100 percent of a home’s value.

Brown’s Labour government is working out the details of a scheme in which banks including Royal Bank of Scotland and Lloyds would put billions of pounds of troubled assets into a structure that will ensure they are only liable for a proportion of any losses. The government hopes the insurance scheme will give banks the confidence they need to reopen lending lines frozen by the credit crisis.

One can only hope that the very expensive recent banking lessons both in the UK and the USA will bring in an entirely different banking culture around the world.

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• RBS deepens cuts in bid to avoid full nationalisation (guardian.co.uk)