RBS head forecasts difficult year ahead

by Gill Montia

Story link: RBS head forecasts difficult year ahead

Fresh from his successful fundraising in the form of a £12 billion rights issue, the head of Royal Bank of Scotland (RBS), Sir Fred Goodwin, has warned of a difficult year ahead.

The bank’s chief executive said that trading in the first six months of 2008 will be in line with expectations but given that no end to the credit crisis is in sight, further write downs are expected.

These will mainly be in relation to the group’s US retail business and Sir Fred expects them to be line with current estimates.

In the second half of the year, RBS will be taking a cautious approach to business.

This will no doubt cheer the governor of the Bank of England, Mervyn King, who yesterday addressed members of the British Bankers’ Association on issues of risk.

He took the opportunity to compare lenders’ attitudes in recent years to a party that got wilder and wilder.

With regard to RBS’ full-year performance, analysts are now forecasting 2008 pre-tax profits of £9.6 billion for the group, compared with a posting of £9.9 billion in 2007.