ROYAL BANK of Scotland (RBS) could this week announce billions of pounds of fresh writedowns due to a further deterioration in the value of risky assets as the financial crisis deepens, analysts have forecast. The forecasts for additional writedowns range from £1 billion (€1.25 billion) to more than £3 billion.
RBS, which trades in Ireland through Ulster Bank and First Active, wrote down £5.9 billion in the first half and is expected to reveal more for the second half when it releases a prospectus for a capital increase.
Shareholders will be offered £15 billion of new shares, with the UK government buying any shares that investors do not want. The prospectus is expected to be released on Friday.
Sandy Chen, analyst at Panmure, forecasts RBS will lose £6.8 billion on writedowns and impairments in the second half, but that includes losses on traditional bank lending as well as structured credit. Keefe, Bruyette Woods last week estimated RBS would post another £2 billion of writedowns, Cazenove has estimated the bank will take another £3 billion, and Fox-Pitt Kelton is estimating £1 billion.
RBS fell about 6 per cent in trading yesterday.
