Investors cash in on RBS' £3.6bn loss

This morning, Royal Bank of Scotland's (RBS) share price rose 7% despite the bank announcing a loss of £3.6bn. Graham Spooner, investment adviser at The Share Centre, comments on today's results and explains how investors are responding in the market.

"The decision for RBS to hand out £1.3bn of bonuses to its investment bankers, despite posting a £3.6bn loss, is likely to have left taxpayers confused. However, customers of The Share Centre appear to be cashing in on the 7% rise in RBS' share price this morning; almost 75% of all RBS deals this morning were sells.

"The underlying core business posted operating profits of £8.3bn, an increase of 89% on 2008, but £5.7bn of these came from the investment banking arm. While the public is understandably concerned about bonus payouts, RBS continues to defend and reward the profitable core of the business.

"The bank's chief executive and deputy chief executive have waived any bonus award for 2009. RBS chief executive Stephen Hester has won plaudits for the way he is handling the bank's difficult situation, but there isn't going to be a short-term fix for RBS. As such, we are listing RBS as a ‘sell' at present, suggesting novice investors leave trading in the bank to experienced shorter-term traders."