The Royal Bank of Scotland could write down the value of its US bank – Citizens – by about £4bn next week, potentially erasing much of the UK lender's annual profit, reports said.
RBS is expected to report a pre-tax profit of about £4.1bn (€5.5bn, $6.3bn) for 2014, according to the average forecast from a Reuters poll of six analysts.
Accounts for RBS show the bank estimated that the goodwill it was carrying for Citizens was £4.3bn at the end of 2013, its last published estimate.
RBS also plans to lower its stake in Citizens to about a third this year, which will mean Citizens being deconsolidated from the RBS Group. The UK lender sold 29% of Citizens Financial Group last September.
The writedown of the non-cash goodwill charge suggests that NYSE-traded Citizens is now worth less than what RBS spent on building it. The writedown is an accounting matter and will not impact RBS's capital position, Reuters reported.
The deconsolidation will improve RBS's capital strength when it occurs. RBS's core capital position should be boosted by about 200 basis points when Citizens is deconsolidated, the news agency added.
Citizens provides retail and commercial banking services to about five million customers in the US and ranks as the nation's 13th biggest retail bank holding, with about $130bn in assets.
Citizens was created through 25 acquisitions, including the $10.5bn purchase of Charter One in 2004.
RBS bought Citizens in 1988.