LONDON - Royal Bank of Scotland, which this week completed Europe's biggest rights issue ever, said today that its operating performance is on track despite the continuing deterioration of credit markets.

Edinburgh-based RBS is the parent of Connecticut-based Citizens Bank, which has the second-largest bank-branch network in Philadelphia and its Pennsylvania suburbs, after Wachovia Corp.

In a trading update notable for its absence of more bad news, RBS also said the integration of ABN Amro, acquired in October, is going according to plan and savings are slightly ahead of expectations.

"While the global economic outlook is placing strains on a number of business sectors, the group's loan portfolio remains robust, with a continued reduction in U.K. personal sector impairment losses but increased U.S. impairments, principally in a specific retail portfolio, as previously disclosed," the company said.

The company said in April that write-downs related to credit market exposures could be $8.4 billion net this year.

"Today's statement does not particularly add any new news, which in itself has not been greeted negatively given the wider economic picture," Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers.

Nic Clarke, analyst at Charles Stanley & Co., said the market would be looking for the detailed numbers on the company's performance when RBS reports interim results on Aug. 8.

"But there has clearly been further downward pressure on U.S. earnings as the impairment charge has worsened and the market is looking for more information on the impact of the recent downgrading of the monolines by the credit rating agencies," Clarke said.

"Furthermore, there is obviously downward pressure on earnings in retail, corporate and wholesale banking with the economic outlook deteriorating and due to the ongoing credit crunch."

Royal Bank of Scotland Group PLC shares fell 1.9 percent to $4.49.

"Whilst we remain very much open for business, our risk appetite is tempered by a cautious stance in relation to short-term economic factors and market conditions," said Sir Fred Goodwin, RBS' group chief executive.

RBS has shored up its reserves by raising $23.7 billion in a rights issue completed Monday.

RBS joined with Fortis NV of Belgium and Banco Santander Central Hispano SA of Spain in a $110 billion takeover of ABN Amro.

Until ABN Amro is formally divided among them, RBS, as consortium leader, is consolidating ABN on its books and is responsible for meeting regulatory requirements. RBS has a 38.3 percent share of ABN, Fortis has 33.8 percent and Santander has 27.9 percent.

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