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Royal Bank of Scotland allegedly owed £500 million by failed Icelandic bank

In a further blow to the battered reputation of Royal Bank of Scotland, it is alleged that the company is owed around £500 million from failed Icelandic bank Glitnir. This has only emerged months after the collapse of the Icelandic banking system, a collapse which saw a number of banks taken over by the Icelandic Financial Supervisory Authority, leading to 8,500 creditors are stepping forward with claims which total £20 billion.

As if to add more fuel to the fire, Royal Bank of Scotland has today confirmed it could lose a further £50 million maximum from its exposure to the Icelandic banking system but this will not be known for some time. Despite the fact that the £500 million debt has been written off by Royal Bank of Scotland, as part of the £24 billion losses announced for 2008, it does not hide the fact that yet again the Royal Bank of Scotland has been caught out in the overseas investment market. This is a bank which grew into one of the largest financial operations in the world and has now been forced to drastically reduce its size over recent months.

Majority owned by the UK government, any further losses by Royal Bank of Scotland will obviously reflect on the reputation of the authorities, which have ploughed billions upon billions of pounds into the bank. Will UK taxpayers ever be able to liquidate their investment at a profit?

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