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5 August 2011
Last updated at 03:31 ET
Royal Bank of Scotland has reported a half-year loss after taking a £733m provision for its exposure to Greek government bonds.
RBS - 84%-owned by UK taxpayers - reported losses after tax of £1.4bn for the six months to 30 June.
RBS also allocated £850m to cover claims for the mis-selling of Payment Protection Insurance (PPI).
The bank reported a statutory loss before tax of £794m compared with a £1.2bn profit in 2010.
RBS led the falls on the FTSE, its shares opening down more than 13%.
Continuing worries about the impact of the eurozone debt crisis and faltering US economy on businesses have seen markets fall sharply since Wednesday.
'Head winds' Despite the losses Mr Hester told BBC Radio 4's Today programme that the bank's restructuring programme was "going well".
He said the bank had been affected by ongoing problems with the global economy which had created "head winds which will effect us in different ways".
Royal Bank of Scotland lent money to the Greek government which may now not be paid back in full as a result of the country's debt crisis.
In its half-year results the bank also confirmed a £1.25bn provision for losses at its Ulster Bank operations in Irish Republic and Northern Ireland.
However the bank reported an improvement in its core operating profit to £1.7bn from £1.1bn in 2010.
Business lending In a conference call following the results Mr Hestor said the bank had exceeded its targets for business lending under the Project Merlin agreement with the government.
The bank's results said it had lent £44.2bn to UK business customers of which £15.5bn went to small and medium sized companies.
The British Banker's Association claimed that banks were "on track" to meet their overall lending commitments under the agreement despite what it claimed were difficult economic conditions.
"The bank's efforts to encourage customers to come forward with borrowing proposals are set against the overall economic environment which remains challenging and business demand for credit which remains weak," said a spokesperson for the UK's major banks.
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RBS - 84%-owned by UK taxpayers - reported losses after tax of £1.4bn for the six months to 30 June.
RBS also allocated £850m to cover claims for the mis-selling of Payment Protection Insurance (PPI).
The bank reported a statutory loss before tax of £794m compared with a £1.2bn profit in 2010.
RBS led the falls on the FTSE, its shares opening down more than 13%.
Continuing worries about the impact of the eurozone debt crisis and faltering US economy on businesses have seen markets fall sharply since Wednesday.
'Head winds' Despite the losses Mr Hester told BBC Radio 4's Today programme that the bank's restructuring programme was "going well".
He said the bank had been affected by ongoing problems with the global economy which had created "head winds which will effect us in different ways".
Royal Bank of Scotland lent money to the Greek government which may now not be paid back in full as a result of the country's debt crisis.
In its half-year results the bank also confirmed a £1.25bn provision for losses at its Ulster Bank operations in Irish Republic and Northern Ireland.
However the bank reported an improvement in its core operating profit to £1.7bn from £1.1bn in 2010.
Business lending In a conference call following the results Mr Hestor said the bank had exceeded its targets for business lending under the Project Merlin agreement with the government.
The bank's results said it had lent £44.2bn to UK business customers of which £15.5bn went to small and medium sized companies.
The British Banker's Association claimed that banks were "on track" to meet their overall lending commitments under the agreement despite what it claimed were difficult economic conditions.
"The bank's efforts to encourage customers to come forward with borrowing proposals are set against the overall economic environment which remains challenging and business demand for credit which remains weak," said a spokesperson for the UK's major banks.
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