Beleaguered Royal Bank of Scotland, which was rescued by the government, today registered its biggest annual loss of 24 billion pounds in 2008 mainly on account of write-downs related to its acquisition of ABN Amro.
RBS had net attributable losses of 7.9 billion pounds, which increased significantly after addition of 16.2 billion pounds write-downs related to goodwill and other intangibles relating to its prior year acquisitions of ABN Amro in 2007 and Charter One in 2004, the bank said in a statement.
"This is particularly disappointing since many parts of our business did well, serving customers and generating high quality profitability. All our divisions were profitable except Global Banking and Markets(GBM) and Asia Retail & Commercial Banking," RBS Chief Executive Officer Stephen Hester said.
The bank had a net profit of 6.8 billion pounds in 2007.
RBS' total income declined 20 per cent to 26.87 billion pounds in 2008 as against 33.56 billion pounds in the previous period.
The total income deteriorated during the second half of year mainly due to trading assets write-downs of 5.8 billion pounds, it stated.
RBS's Asia Retail & Commercial Banking has presence in markets including India, Pakistan, China, Taiwan, Hong Kong, Indonesia, Malaysia and Singapore.
The non-cash item (goodwill impairment losses) have minimal impact on capital but highlight risk of acquisitions if economic conditions adversely change, Hester added.
Further, the greatest increase in impairments occurred in GBM, where fourth quarter impairments totalled 2.93 billion pounds, including a loss of about 900 million pounds on the Group's exposure to LyondellBasell, the statement said.
The Regional Markets businesses in all geographies also experienced a noticeable increase in impairments in the second half, particularly in the UK and Irish corporate and US personal segments.
In its outlook for 2009, the Bank said that it would be very tough for the world economy.
RBS expects to see some erosion of underlying income levels as a result of weaker business activity and low interest rates squeezing savings margins, while credit costs rise, the statement said.
"We hope that markets will be less disrupted than in 2008, with lower associated write-downs, but time will tell. 2009 has, in fact, started positively for our businesses," RBS stated.
