LONDON (Reuters) - Royal Bank of Scotland said it made a loss of over 20 billion pounds ($30 billion) last year, the biggest loss in British corporate history, including a huge goodwill hit on its purchase of parts of ABN AMRO in 2007.
RBS said credit and market conditions deteriorated further in the fourth quarter and it will report a loss before goodwill impairments of between 7 billion and 8 billion pounds for 2008.
It expects a goodwill impairment charge of between 15 billion and 20 billion pounds, largely related to its purchase of parts of ABN. It was still assessing the goodwill impairment, it said.
RBS warned on its 2008 earnings alongside news of a second UK bank rescue plan. The plan aims to prompt banks to lend more to corporates and consumers to kick-start a deteriorating economy.
RBS shares are expected to fall about 11 percent on Monday's opening, a dealer said.
The UK government will replace the 5 billion pounds of RBS preference shares it holds with ordinary shares, increasing its stake in the lender to up to 70 percent from 58 percent.
Shareholders will be able to apply for new shares at a fixed price of 31.75 pence, representing an 8.5 percent discount to Friday's closing share price.
The capital raising will improve RBS core tier 1 ratio by just under one percent to between 6.9 percent and 7.4 percent, the bank said.
The redemption of the preference shares will remove an annual interest charge of about 600 million pounds and improve its cashflow and capital generation, which it said will allow it to increase lending in Britain by 6 billion pounds.
The bank is working intensively on a new strategy involving "significant business, balance sheet, management and cultural restructuring" and will unveil significant elements of the plan at its full-year results due on February 26, it said.
(Reporting by Steve Slater; Editing by David Holmes and Rupert Winchester)
