Banking, finance, and taxes
With Royal Bank Of Scotland (RBS) Facing Record Loss, US Banks To Follow
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Analysts who think that money center banks are out of the woods, may want to look at the RBS results for the first half of 2008. According to The Times, "The Royal Bank of Scotland is poised to unveil the biggest loss in UK banking history after taking a hit of almost £6 billion from the credit crisis."
The news should further undermine the fantasy being spread by financial executives that the credit crisis is coming to an end.
Recently estimates by the IMF are that the entire toll of the mortgage-back paper disaster will come to over $1 trillion. By most analysts estimates, only about $400 billion of that has been written off. A series of earnings hits to the tune of double that number would mean many US banks would have to raise huge sums of money, diluting shareholders by considerable sums.
US banks stocks have a long way to drop. If losses balloon in the second half of the year, some could fall as much as another 50%.
Douglas A. McIntyre
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