SHARES in Royal Bank of Scotland tumbled 7.4 per cent yesterday as a leading City analyst warned that the bank could also make a loss in 2009 on top of a widely expected first-ever loss this year.
Jonathan Pierce, banking analyst at Credit Suisse, said in a note entitled Staring into the abyss? that British banks faced a severe deterioration in conditions through the first quarter of next year that could renew strain on capital. Pierce said: "
Things are getting worse, faster than we thought."
The deterioration in this quarter and in the first quarter of 2009 "will be relatively severe" as the global credit crisis affects markets and the economy, he said.
Pierce added that although RBS remained his favourite UK banking stock, it was unlikely to see much good news for some time. "We think the bank will generate a loss at a group level in 2008, and wouldn't rule out losses for next year as well," Pierce said.
New RBS chief executive Stephen Hester said this week that he was "not wildly disputing" City expectations for a full-year loss for 2008, although he did not comment on prospects for 2009. The bank dived £692 million into the red in the first six months of 2008, following £5.9 billion of toxic asset writedowns.
Yesterday the bank's shares closed down 5.1p at 63.9p.
