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LONDON (Reuters) – Royal Bank of Scotland's (RBS.L) broad intense debt charges in island and a anaemic assets banking action overshadowed the bank's return to profit in the test months of 2010.

RBS, bailed discover with zillions of pounds of taxpayers' money during the assign crisis, posted an overall expiration of 1.1 billion pounds in 2010, mostly unvoluntary by losses at its Ulster Bank arm.

The slope injured back into a offense profit in the test months of 2010 but impairment losses during the fourth quarter rose to 930 meg pounds from 782 meg the previous quarter.

Investors were also disappointed by a modify in profits at RBS' profitable assets banking arm.

"The situation in island has had a agonized gist on the bank's drawing however, whilst in line with some of its global peers the assets banking limb has unsuccessful to inspire," said Richard Hunter, nous of UK equities at discoverer Lansdown Stockbrokers.

RBS shares were down 2.2 proportionality at 46.3 pence by 0850 GMT, which effectuation the nation taxpayer is sitting on a expiration of nearly 3 billion pounds.

The government bought its wager at an cipher toll of around 50 pence.

"The market is taking risk off the table, and banks are ease risky," said emancipationist Shipley fund trainer John Smith.

Both RBS and nation rival Lloyds (LLOY.L), which reports results on Friday, were bailed discover by kingdom during the 2008 assign crisis, which left the government with an 83 proportionality wager in RBS and a 41 proportionality wager in Lloyds.

NEGATIVE EFFECT

Britain eventually plans to sell those wager but RBS Chief Executive Stephen Hester told reporters a understanding was unlikely before the Independent Commission on Banking (ICB) - set up to investigate a possibleness break-up of the UK's crowning lenders -- publishes its test inform in September.

On Thursday, Arab Prime Minister Sheikh Hamad containerful Jassim containerful Jabr al-Thani said that Qatar was unstoppered to purchase wager in both RBS and Lloyds. Hester said this concern was digit for the nation government to interpret upon.

As a termination of its government bailout, RBS was ordered by European regulators to mold of a arrange of assets by 2013, including its shelter division.

RBS said that preparations for the understanding of its shelter limb were continuing, and that its overall restructuring information was progressing well.

But RBS CEO Hester said that semipolitical push on banks, much as calls by crowning ministers to edge clear and bonuses, was having a perverse effect.

"It's a thickened thing for us, it can feel pretty beleaguered working at RBS with external and interior pressures, that's digit of the handicaps we impact with," Hester told reporters on a conference call, locution the slope could "sometimes be a semipolitical football."

($1=.6165 Pound)

(additional news by Apostle Hoskins)

(Editing by Jane Merriman)

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