Oli Scarff/Getty ImagesThe headquarters of the Royal Bank of Scotland in London.
Stefan Wermuth/ReutersStephen Hester, chief executive of the Royal Bank of Scotland.
7:44 p.m. | Updated
LONDON — Royal Bank of Scotland, the British bank partly owned by the government, reported Friday a loss of £1.4 billion, or $2.3 billion, for the first half of the year, compared with a profit last year, as exposure to Greek government debt continues to weigh on European financial firms.
The loss at R.B.S. comes in contrast to its profit of £9 million for the first six months of 2010. In the latest period, the bank said it had set aside £733 million to cover its exposure to Greek sovereign debt. Costs to pay compensation to customers for mistakenly selling some insurance products also cut into income.
Stephen Hester, the R.B.S. chief executive, said he was pleased with efforts to reduce costs and streamline the bank’s businesses, but he warned that a more difficult economic environment would slow down his efforts.
“There is no shortcut to achieve our goals,” Mr. Hester said in the statement. “Economic and regulatory headwinds may be challenging, but the momentum that our people and restructuring actions have sustained thus far in the R.B.S. recovery plan should continue to stand us in good stead.”
R.B.S. became the latest European bank forced to take a hit for its holdings in Greek sovereign debt. France’s two biggest banks, Société Générale and BNP Paribas, disclosed large charges on their Greek debt exposure this week. European leaders approved a Greek rescue plan last month but asked bondholders to share some of the costs.
The British bank’s gross holding of Greek government debt was 1.2 billion euros, or $1.7 billion, according to figures compiled by the European Banking Authority.
R.B.S. also said it put aside £850 million to pay for customer claims about mistakes the bank made in selling a salary insurance product. Other banks, including the Lloyds Banking Group and Barclays, took similar steps this week.
Operating profit at R.B.S.’s global banking and markets unit, which includes trading activities, fell to £483 million in the second quarter from £914 million in the same period last year. R.B.S. had a core Tier 1 ratio, a measure of its capital strength, of 11.1 percent at the end of June.
R.B.S. had a loss of £897 million in the three months through June, compared with a profit of £257 million in the three months through June last year.
Article source: http://dealbook.nytimes.com/2011/08/05/r-b-s-posts-loss-of-2-3-billion-for-half/?partner=rss&emc=rss