RBS soothes City on loan book fears

INVESTORS heaved a sigh of relief as Royal Bank of Scotland - owed £100m by WorldCom - insisted there was no material deterioration in the quality of its loan book. 'Overall credit quality remains strong,' it said in a trading statement ahead of interim results in August.

Chief executive Fred Goodwin said there would be no surprises in the first-half figures, which would portray 'a very positive picture of the group's progress'. He said of WorldCom: 'We did have our TV sets switched on yesterday.' Nobody was surprised by the latest problems in the telecoms sector, he said, and people had been crawling over the numbers for months. RBS has about £3bn lent to telecoms companies.

The bank steered investors to expect about £650m of bad debts in the six months to June, compared with £617m in the previous six months. Goodwin said: 'It's very early to say we've seen the peak of the (bad debt) cycle, but in the past few months it has stabilised.' He promised continued strong growth in income, improvements in efficiency and stable margins.