AN UPDATE FROM THE CEO OF UK PLC
I am pleased to confirm record losses from our RBS banking subsidiary, and to announce losses of almost £10 billion at HBOS, where we have a substantial minority stake through the shares we hold in the Lloyds Group.
Some of you may have been disappointed to read that RBS only lost £24 billion as reported, after we had promised you losses of £28 billion. You will be relieved to know that the gross figure revealed on page 6 of the RBS financial statement is I am delighted to say £40.7billion, another new record for such a figure.
In order to consolidate our investment in these excellent loss making businesses I have decided to put more capital into RBS, and to make available guarantees to the Lloyds Group which I hope they will accept.
Our policy of “Putting the losses back into British business and banking” is going so well, that it is a good idea to double up our position. I am therefore committing up to an additional £25.5 billion of new capital into RBS, and will be guaranteeing hundreds of billions of pounds of bad and doubtful debts and investments on your behalf. The opportunities to lose money are unparalleled and it would be a pity to miss out at such a time.
It is now clear that the merger which we urged on Lloyds with HBOS has been a brilliant manoeuvre as part of our strategy, giving us the chance to have a substantial stake in a larger group which now has great scope to record losses on a material part of its business.