RBS sells off $208 billion assets after getting ‘too big’

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Aug 8: Royal Bank of Scotland Group Plc sold about $208 billion of investment-banking assets this year because it got "too big" and reported the first loss since going public 40 years ago.

Royal Bank rose as much as 4.7% in London trading today after the bank, the UK's second biggest, reported a less- than-estimated loss of 761 million pounds ($1.5 billion) excluding temporarily acquired units. The 5.9 billion pounds of writedowns it announced in April may be sufficient for the year, the Edinburgh-based company said today in a statement.

The shrinking of RBS is a U-turn for a bank that led two partners last year in the takeover of Amsterdam-based ABN Amro Holding NV. RBS, which paid $22 billion for its part in world's biggest banking acquisition, "was too big in the context of the world changing," chief executive officer Fred Goodwin said on Friday.

"They obviously have their foot on the brakes," said Neil Smith, a Dusseldorf-based analyst at WestLB AG, who has an "add" rating on RBS shares. "Everyone is slowing down to focus on boosting their capital ratios."

Barclays Plc, Britain's third-biggest bank, wrote down or sold assets to manage "difficult positions" in credit-related assets, president Robert Diamond told investors on Thursday. Holdings of securities tied to US subprime mortgages, bond insurers and leverage loans fell by 8.3 billion pounds, and Diamond, 57, said he'll seek to unload more. RBS has been criticized for paying too much for ABN Amro before the collapse of the US subprime mortgage market. RBS, Banco Santander SA of Spain and Fortis of Belgium outbid Barclays Plc last year for ABN Amro, paying a total of $110 billion.