RBS Reacts to Buy to Let Loan Turmoil

Wed, 04 Jun 2008

Following concern at the plight of the buy to let industry, the Royal Bank of Scotland has moved to distance itself from the sector. The Royal Bank of Scotland faces a nervy week with a £12 billion rights issue looming, and its anxiety was illustrated by a statement which revealed that the buy to let industry accounts for only 1 per cent of its UK loan portfolio.

The uncertainty regarding the buy to let market has stemmed from the crisis at Britain’s largest buy to let lender, Bradford and Bingley, who this week issued a profits warning and redrew their fundraising.

However, Bradford and Bingley aren’t the only bank to suffer, with Alliance and Leicester, Barclays, HBOS and Lloyds TSB all experiencing a fall in share price. The Royal Bank of Scotland’s share price has also suffered, with a 25 per cent fall in price since April. RBS has since sold assets to raise cash, and has attempted to sell its Churchill and Direct Line insurance business for £7 billion.
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