RBS warns 
on Russian 
loans and Yes vote in 
Scotland

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Part-nationalised lender Royal Bank of Scotland said yesterday it had placed restrictions on its lending in Russia following developments in the Ukraine.

The European Union cut off financing for five major Russian banks on Thursday over Moscow’s support for separatist rebels in Ukraine. The measures aim to prevent Russian banks from raising money on Western capital markets.

RBS said it had reviewed credit ratings, adjusted lending limits and placed additional credit restrictions on new business in Russia. It is also reviewing how it is exposed to the international sanctions.

RBS, which is 81-per cent owned by the British Government, said it had reduced lending in Russia during the first half of this year by £100m to £1.8bn. That included £900m of corporate lending and £600m of lending to banks. It said nearly half of the bank lending was fully hedged. Its total Russian exposure, including assets held off balance sheet for clients, amounted to £2.1bn.

RBS also said a vote by Scotland to become independent from the rest of the United Kingdom could significantly increase its costs and have a material impact on its business.

Earlier this year, the bank said that it was considering its options if Scots were to vote in a referendum on September 18 to end their 307-year union with England. It has been careful not to enter the political debate over Scottish independence, repeatedly saying that the matter is one for the Scottish people to decide.

But RBS said a vote for independence “could significantly impact the group’s costs and would have a material adverse effect on the group’s business, financial condition, results of operations and prospects”.

It said that uncertainties resulting from a ‘yes’ vote would be likely to significantly impact its credit ratings and “could also impact the fiscal, monetary, legal and regulatory landscape to which the group is subject”.

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