Royal Bank of Scotland cites sharp loss

Royal Bank of Scotland reported a net quarterly loss of STG1.8 billion ($A3.28 billion) on Friday and said it expected a slow recovery, despite massive state support.

The announcement comes just days after the British government increased its stake in RBS to 84 per cent, having decided to pump billions more pounds into the bank, making the rescue the world's biggest bank bailout.

The net loss during the three months to September 30 of STG1.8 billion ($A3.28 billion) compared with profit after tax of STG871 million ($A1.59 billion) during the third quarter of 2008.

Bad debts stood at STG3.279 billion ($A5.97 billion) in the July-September period.

RBS chief executive Stephen Hester said that the bank's recovery would be slow, closely mirroring the global economy's return to strength after recession.

"Economic recovery is likely to be slow and the pain of economic adjustment will take years to subside. Our business will reflect these issues," said Hester.

Despite the deep net loss, the share price of RBS jumped 6.15 per cent to 37.38 pence on London's benchmark FTSE 100 index, which was up 0.15 per cent to 5,133.54 points in midday trade.

"Positive news for Stephen Hester is that the core retail banking operations are profitable," said ETX Capital senior trader Manoj Ladwa.

RBS meanwhile reported a third-quarter operating net loss of STG1.525 billion ($A2.78 billion).

Royal Bank of Scotland has been ravaged by the credit crunch and the 2007 takeover of Dutch group ABN Amro at the top of the market.