Royal Bank Of Scotland 3Q Operating Loss GBP1.5 Billion

By Patricia Kowsmann Of DOW JONES NEWSWIRES LONDON -(Dow Jones)- Royal Bank of Scotland Group PLC (RBS), which is about to see its government ownership rise to 84%, on Friday said its operating loss for the third quarter narrowed from the second quarter, although it remains cautions on the outlook. The U.K. bank posted an operating loss for the three months ended Sept. 30 of GBP1.5 billion, narrower than GBP3.5 billion it posted in the second quarter. Adjusting for movements in the fair value of the bank's own debt, it posted a pre-impairment operating profit of GBP2.2 billion, compared with GBP2.1 billion in the previous quarter. "Profitability in our core businesses will recover fully only when our own actions are also complemented by more normal interest rates and bad debt experience," Chief Executive Stephen Hester said. RBS is about to embark in a massive restructuring--including big asset sales--ordered by the European Union, as the U.K. government pumps an extra GBP25.5 billion into RBS through an scheme to insure GBP280 billion in toxic assets. Last year, RBS received GBP20 billion in state money, after it fell into disarray when the financial crisis intensified and revealed deep problems in the ABN Amro businesses it had acquired in an ill-timed acquisition, late in 2007. In exchange for the government aid, RBS will now have to shed businesses over the next four years, as the EU seeks to make sure the bank isn't at a competitive advantage over peers that stayed independent. The EU's demands come at a time banks are reporting more robust earnings following a year of shaky results. On Friday, RBS said impairments in the third quarter remained high at GBP3.3 billion but fell 30% from the second quarter. It also said net interest margins are stabilizing. -By Patricia Kowsmann, Dow Jones Newswires. Tel +44(0)207-842-9295, patricia.kowsmann@dowjones.com Order free Annual Report for The Royal Bank of Scotland Grp. Visit http://djnweurope.ar.wilink.com/?ticker=GB0007547838 or call +44 (0)208 391 6028