RBS eyes US expansion as profits rise

Royal Bank of Scotland, one of Britain's most acquisitive banks, yesterday signalled its interest in doing more deals, focusing on boosting its presence in America.

The move comes as RBS has nearly finished bedding down the series of acquisitions it has made in the last few years, including its rival NatWest in the UK.

Fred Goodwin, the chief executive of RBS, said: "We are very close to the end of NatWest's integration, so in terms of management ability, we could do it."

Announcing upbeat results for the first six months of the year, Mr Goodwin said he saw opportunities in the UK, but added that it was "far easier" to add businesses in the US.

This is partly because RBS would be blocked from buying most of its major rivals in Britain on competition grounds. It is also because RBS's businesses in America are flourishing, with the integration of the US bank Mellon, which it purchased last year, progressing ahead of schedule.

Its US retail banking business saw operating profits jump ahead by 62 per cent in the six months to 30 June.

Overall, pre-tax profits rose 15 per cent to £3.15bn, while the bad-debt provision for the six months to June was £652m. This was modestly higher than the £622m reported for the previous six months, though 78 per cent higher than at the 2001 first half.

RBS's shares ricocheted, closing down 6 per cent at 1443p, because of fears that Spain's Santander bank would sell some of its 8 per cent stake in RBS to cover losses on its Latin American holdings.

Santander, which has been an RBS shareholder for 14 years, said it had not decided what to do but anticipated its relationship with RBS continuing.

Martin Cross, an analyst at Teather & Greenwood, said: "Santander might dispose of its stake but the shares should be easy to place. Royal Bank has the cheapest price-earnings ratio in the UK banking sector based on growth rates for the next two years."

Separately, Standard Chartered, which is focused on the Asian market, said it had been hit by an increase in bankruptcies, especially in Hong Kong, which drove bad-debt provisions up by $138m (£97m) to $407m in the six months to 30 June.

Standard said business in other parts of Asia had performed well, helping profits to rise 1 per cent from a restated $628m for the same period a year ago. Its shares surged 10 per cent to 670p.