RBS trading in line, confident on insurance sale

By Steve Slater

LONDON (Reuters) - Royal Bank of Scotland's performance and writedowns on risky assets remain in line with its previous guidance, but its results will be held back by the impact of the global credit crunch, it said on Wednesday.

It said it also remained confident of selling its insurance arm for the price it had in mind at the start of an auction, despite speculation tough markets have dampened interest.

Britain's second-biggest bank, which raised 12 billion pounds ($23.5 billion) in the biggest ever rights issue earlier this week, said it was adopting a cautious stance towards risk in the light of jittery markets and economic storm clouds.

However, it said the benefits -- in terms of both income and cost savings -- from last year's purchase of large parts of Dutch group ABN AMRO, were running slightly ahead of target.

By 4:30 a.m. EDT RBS shares were up 2.5 percent at 239 pence, one of the top performing UK stocks and helping other banks higher.

European banks also got a boost from a media report that Russian billionaire Suleiman Kerimov has been buying shares in major Western banks.

"The rights issue removes one overhang and valuation appears attractive," said Bruce Packard, analyst at Pali International. "However, it seems likely that conditions are going to get worse in the real economy banking book, before an improvement comes."

RBS Chief Executive Fred Goodwin said the bank is cautious on prospects, but it "remains very much open for business".