RBS drops in London trading over Irish exposure

ROYAL Bank of Scotland Group Plc (RBS) dropped in London trading yesterday because of investor concerns about its exposure of £42.2 billion (€50bn) of loans to Ireland.

The RBS stock lost 2.7% to 41.02p at the close in London, the lowest in four months. The bank was the sixth-worst performer in the 54-member Bloomberg 500 Banks Index.

MFGlobal Securities analyst Shailesh Raikundlia said: “It’s to do with their exposure to Ireland. They have significant exposure.”

Irish bond yields have soared on concern that the government will need assistance bailing out its banks, struggling with bad loans after the end of a real estate boom.

Irish Central Bank governor Patrick Honohan said that loan losses at the country’s lenders, including foreign-owned banks, come to at least €85bn.

RBS’s Ulster Bank unit had €44.6bn of loans in Ireland, including €25bn of mortgages at the end of the third quarter, the bank said last week. It also had €5bn invested in Irish sovereign debt, according to stress tests in July. A spokesman for RBS declined to comment on the price movement.

Ulster Bank posted loan losses of €338 million in the three months ending September 30, double those in the year-earlier period.