RBS falls on Irish exposure worries

11th Nov 2010 12:44

Worries that the Irish debt situation could hurt Britain surfaced today as shares in RBS fell on concerns over the nationalised bank's exposure to the former Celtic tiger.Traders continued to offload Irish bonds on Thursday, concerned over the ability of the country's government to pay its debts. That pushed the difference between the returns investors demand to lend money to the Irish government and the German government even higher. Irish 10-year government bond yields are now approaching 9%.Fears were stoked yesterday by the governor of Ireland's central bank Patrick Honohan saying that Irish and international banks' loan losses may amount to more than €85bn.Shares in Irish banks fell sharply, while those of RBS, which has extensive operations on both sides of the border in Ireland through its subsidiary Ulster Bank, also saw substantial losses. Ulster Bank posted a loss of £176m in the third quarter.President of the European Commission Jose Manuel Barroso said that the EU was ready to step in to support Ireland if necessary.'We are monitoring the situation closely, but we support the efforts of the Irish authorities,' he said.Ireland became heavily indebted after having to bail out its banking sector during the financial crisis. The government has been implementing swingeing spending cuts, undeterred by the unpopularity of such measures. More cuts are to be unveiled in December.