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Royal Bank of Scotland faces £500 million loss on Cattles

As we have covered on a number of occasions over the past few weeks, Cattles, the doorstep lender, has hit serious financial trouble. Despite a fairly upbeat start to the UK recession the business has suffered from a chronic increase in clients defaulting and the company's inability to obtain a banking licence from the UK authorities. The ability to hold customer funds on deposit would have allowed the company access to significant capital but this fell short and the company is now in debt to the tune of around £2.5 billion.

The company itself has issued three profits warnings over the last few weeks and it has now emerged that Royal Bank of Scotland is the lead lender in the industry with an exposure of £500 million. While the company is still trading at the moment, accountants are currently crawling through the books looking at whether the business can be saved but the suspension of three directors has also caused serious concern within the investment and banking communities.

The last thing the Royal Bank of Scotland needs is headlines covering the company's exposure to one of the U.K.'s leading doorstep lenders and the potential loss of £500 million. UK taxpayers are now the lead shareholders in the company and further losses at this early stage will not go down well at all.

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