Troubled RBS has trimmed its total exposure to real estate from £74.8bn to £69.3bn in the first half of the year.
However, the overall picture was bleak as the bank reported a loss of £1.5bn for the first half of the year.
UK Corporate banking reduced its core commercial real estate loan book by £1.8bn, while non-core real estate lending fell by £3.9bn during the period. The commercial real estate sector was the largest contributor to defaulting assets in the bank’s non-core portfolio, accounting for 80% of all defaults.
However, RBS as a whole still has a sizeable Irish loan book to manage, with subsidiary Ulster Bank still having a £16bn exposure to real estate.
Stephen Hester, group chief executive said: “We are in a chastening period for the banking industry. The consequences of the sector’s past over-expansion are still being accounted for, probably with some way still to go. The mistakes and vulnerabilities carried over from that period are both financial and cultural. The consequences of these mistakes have seen the reputation of the sector fall to new lows.
“This is dangerous because customer trust is a pre-requisite for a successful banking sector and an effective banking sector is so important to economic stability and growth”
Sophia.furber@estatesgazette.com
