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RBS posts £1bn net loss for first half

Royal Bank of Scotland has posted a £1bn net loss for the first half of 2009.

Excluding write-downs of goodwill, RBS saw a pre-tax profit of £15m.

The bank, which is 70 per cent owned by the Government, has also appointed a new chief financial officer, Bruce Van Saun who will join in October, completing its senior management restructure. All nine members of the board will be new to their posts within the last 17 months.

RBS announced £7.5bn of impairments across the group, but a gain of £3.8bn from a debt exchange.

In a letter to shareholders, group chief executive Stephen Hester says: “We can restore the Bank to standalone strength and viability. We will thereby rebuild attractive, sustainable shareholder value and, I believe, allow Government support to be recouped in full.

“But there will be no miracle cures. Our task is no less than one of the largest bank restructurings ever done, in the face of strong economic headwinds. Overall results may not substantially improve until 2011 and full recovery will take time. Along the way we will still need the Government support that gives us time and strength to restructure.”

This is in contrast to Lloyds Banking Group’s forecast for an upturn in performance in the second half of this year.

Lloyds posted a loss of £4bn in the first half of 2009 citing impairments in HBOS legacy assets as the main reason.

Group chief executive Eric Daniels says: “While the environment will remain challenging, management expects the economy to stabilise in the second half and start recovering slowly in 2010. On this basis, management expects the performance of the Group to improve from the second half, principally as a result of a reduction in the level of impairments.

“Overall, impairments in the second half of 2009 are expected to be significantly lower than the first half with progressive reductions thereafter.”

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