LONDON, England -
August 4, 2008 - Royal Bank of Scotland will this week post the biggest loss in
British banking history when it reveals that the £5.9bn of writedowns taken
against its "toxic" credit market assets have pushed it about £1.3bn
into the red for the six months to June, compared with £5bn profit last year.
Questions will be raised about Barclays' credit market impairments when RBS's closest rival reports half-year numbers on Thursday. Barclays is expected to take another £500m of provisions, net of any gains on its own debt, on top of the £1bn already disclosed this year and £1.6bn taken last year.
Citigroup analysts reckon the bank, which has just completed a £4.5bn capital-raising, needs to write down the portfolio by another £9bn to be as conservative as RBS.
HSBC will set the trend today, when it discloses another $2bn-$3bn (£1bn-£1.5bn) of credit market provisions in its global markets business for the half. The bank will also reveal another $4bn of bad debts for the second quarter in its US retail business, HFC.
It has already taken $15.4bn of provisions in the past 15 months, largely against sub-prime mortgages.