RBS's investment bank takes hit

By Olesya Dmitracova

LONDON (Reuters) - A near 6 billion pound hit on credit assets in its investment bank dragged Royal Bank of Scotland to a first-ever loss, but the unit's underlying business fared better than many rivals.

The Global Banking and Markets (GBM) division swung to a 3.2 billion pound operating loss in the first half on income of 5.3 billion, as a 5.9 billion pound writedown was partially offset by an 812 million pound reduction in the value of debt it carries.

That compared to a 2.6 billion profit a year ago.

"The GBM revenues were a pleasant surprise, only down 10 percent year-on-year proforma despite the combination of horrible markets and the integration turbulence," said Bruno Paulson, analyst at Sanford Bernstein.

Leading investment banks have shown revenue drops of about a third, he estimated.

Net operating income at HSBC's investment bank fell 15 percent in the first half, while Barclays Capital, the investment banking arm of Barclays, saw its income decline by 18 percent to a near-2006 level.

France's BNP Paribas said second-quarter revenue at its investment bank fell by a quarter.

RBS ranks fourth globally for syndicated loans, fifth for bonds and 10th in equity capital markets, according to Thomson Reuters data for the first six months of this year.