RBS net loss triples to £1.52 bn on debt charge

State-rescued Royal Bank of Scotland on Friday announced a first quarter net loss of £1.52 billion (1.87 billion euros, $2.46 billion), almost three times the amount posted a year earlier.

RBS, 82-percent owned by the British government after a massive bailout in the global the financial crisis, posted a 2011 first quarter net loss of £528 million.

The lender said losses soared owing to an increase in the value of its outstanding debt to £2.46 billion.

"As RBS's credit spreads tightened during the quarter, a charge of £2,456 million was booked for (our) own credit adjustments," RBS said in a statement.

But the bank's underlying performance was brighter, with RBS posting a first quarter operating profit of £1.18 billion.

RBS also confirmed that it would repay the last of emergency state loans totalling £163 billion but the British government will still own almost all of the bank after a £45.5 billion bailout following the 2008 financial crisis.

The Edinburgh-based bank said it would also begin to pay dividends to holders of preference shares at a cost of £350 million after an EU ban on such payments in the wake of the bank's financial rescue expired.

"The start of 2012 has shown pleasing progress at RBS within the context of a flat economic environment," chief executive Stephen Hester said in the statement.

"Excellent progress continues in removing 'mistakes' of the past. Non-core assets have fallen, again. Liquidity is stronger, again. Next week the bank will repay the last of the UK government-backed funding support we received during the crisis."

RBS shares jumped 1.65 percent to 24.95 pence in early deals, topping London's benchmark FTSE 100 index which was down 0.23 percent at 5,753.18 points. RBS is trading at half the 50 pence a share paid by the British government in the bailout.

"The bank continues to inch its way out of intensive care," said Keith Bowman, an equities analyst at Hargreaves Lansdown Stockbrokers in London.

"A move back into profitability has been made by its investment bank division, whilst its retail and commercial businesses are now firmly back in the black, he said.

"The lifting of EU punishment restrictions is allowing it to recommence a preference share dividend, while the government's emergency loan is finally being repaid.

"On the downside, Ireland remains a headache, with Ulster Bank still loss-making ... In all, life support is being removed, with the bank's near failure now being consigned to another chapter in its history," Bowman added.

RBS also revealed on Friday that it had set aside a further £125 million to compensate clients who were mis-sold insurance, bringing the total expected outlay on this count to £1.2 billion.

Last year, Britain's banks lost a high court appeal against tighter regulation of PPI, which provides insurance for consumers if they fail to meet repayments on a credit product such as loans, mortgages or credit cards.

PPI became controversial after it was revealed that many consumers had been sold the insurance without understanding that the cost was being added to their loan repayments.

At the height of the global financial crisis, the British taxpayer stumped up £111 billion to provide emergency liquidity assistance to RBS, while the US Federal Reserve loaned around £52 billion.

Amid public anger over a raft of poor results however, Hester waived his latest annual bonus of shares worth £963,000, which had been due on top of his £1.2 million salary for his work in 2011.

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