RBS shares dive as H1 results reveal £1.4bn loss

Royal Bank of Scotland has blamed the European crisis and PPI claims for £1.4bn losses in the first half of 2011.

The bank, which is 84% owned by the UK government, has allocated £733m for its exposure to Greek government bonds and £850m to cover claims for the mis-selling of PPI.

In the second quarter RBS recorded a pre-tax loss of £678m compared with a loss of £528m in Q1 2011 and a profit of £257 million in Q2 2010.

Operating profits were down down £818m in the second quarter, 22% less than Q1 but for the half year operating profit was £1.9bn an improvement on £1.1bn in the first six months of 2010.

Despite the grim results Stephen Hester, group chief executive, said the results showed the bank's restructuring continued and "business performance is resilient in challenging market conditions."

"There is no shortcut to achieving our goals. Economic and regulatory headwinds may be challenging but the momentum that our people and restructuring actions have sustained thus far in the RBS recovery plan should continue to stand us in good stead."

RBS' share price reacted adversely to the news falling 12.5% to 26.5p in early trading.