The Royal Bank of Scotland sinks £1.4bn into the red


Royal Bank of Scotland has plunged back into the red with a £1.4bn ($2.3bn) pre-tax loss during the three months to September.

RBS blamed the loss on changes to the "fair value" of its own debt, but said it was making "tangible progress".

The bank, 84%-owned by the tax payer, had appeared to be on the mend after it reported a profit of £1.15bn for the previous three months.

Market conditions would remain challenging, RBS said.

Chief executive Stephen Hester said the bank was making "good progress in our recovery", but that highly volatile accounting charges could "obscure our underlying story".

RBS said while bad debt provisions were improving, changes to the "fair value of own debt" had caused the losses.

The bank's share price dropped sharply on the news, ending the day down 4.5% or 2.14 pence at 45p, making it the day's biggest loser on the FTSE 100 index.

Since October 2008, the bank has announced 23,000 job losses worldwide, including 17,100 in the UK.

Government control

RBS led a consortium that bought Dutch bank ABN Amro before the credit crunch in 2007, but the deal was a disaster, weakening its balance sheet and forcing the government to pump in about £45bn to keep the bank afloat.

The government paid an average of 50.2 pence for each of the 90.6 billion RBS shares it bought to save the bank from collapse. .

There are not thought to be any government plans to sell its stake in either RBS or Lloyds any time soon - both in the hope of making a larger profit as the bank continues to strengthen and the feeling that such a move could threaten the fragile banking recovery.

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