Projo Biz Blog

Royal Bank of Scotland Group PLC, the owner of Providence-based Citizens Financial Group, said this morning it could suffer its first ever annual loss this year after it announced more writedowns on bad assets in the third quarter.

The Royal Bank, one of three British banks relying on a multibillion pound government bailout, said that mounting bad loans in Britain, the United States and Asia had forced it to write down $325 million worth of assets in the third quarter, on top of $9.4 billion of writedowns in the first half of the year.

Incoming Chief Executive Stephen Hester declined to forecast what the company's 2008 full-year results would be during a conference call with journalists, but he warned that the "deteriorating economic environment" would negatively impact annual profits.

When asked what he thought of analysts' predictions that the bank would suffer an annual loss, he replied: "I'm not wildly disputing what you claim analysts are saying."

The Royal Bank's third-quarter writedown would have been $2.2 billion, but accounting changes relating to the way certain securities are classified allowed the company to reduce the reported number by $1.9 billion.

The Royal Bank's losses, resulting largely from its exposure to bad U.S. subprime mortgages and its purchase of ABN Amro bank at the top of the market, have been so bad it has been forced to turn to the government for money, along with Lloyds TSB Group PLC and HBOS PLC.

In October, the Royal Bank announced the government would be investing up to $31 billion in the bank in exchange for as much as 60 percent ownership.

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