After initially estimating non-performing loans across the Royal Bank of Scotland loan portfolio at 8.5 per cent, and sticking to this projection until as recently as June, ANZ has discovered the ratio was over 12 per cent at the end of September.That's at least 41 per cent worse than the initial forecast, though ANZ still maintains "RBS assets have been performing within expectations."It's a bit of a mystery how RBS assets that were estimated at a total US$3.2 billion were just $3.0 billion in September because even a "strong currency appreciation" can't account for the drop in Australian dollar terms.The exact amount of impaired assets isn't known, but we gather it is somewhere in the region of $370 million to $390 million.ANZ says the rise in impaired assets is a result of the reclassification of certain exposures from productive to impaired because they shouldn't have been "performing" in the first place as there was a collective provision on them. "In particular, there was a portfolio of over $100m in one of the countries that RBS covered to over 80 per cent by a collective provision which was classified as performing," ANZ wrote in an email."We changed this treatment in the second half, on the basis that it should be classified as impaired if it needs a collective provision and should have been classified impaired back in 2009 as well," ANZ explained.It's unclear what the impaired assets comprise of, but going by the extent of provisions, the outlook certainly doesn't look bright and this also applies to loans from the recent Landmark acquisition. The total impaired assets from the two portfolios totalled $423 million and had individual provisions of $394 million. This is a whopping 93 per cent coverage rate compared with just a 29 per cent average across the group.There was also a collective provision of $240 million from acquired assets, ANZ says.Meanwhile, the net value of assets that ANZ acquired from RBS worked out to $128 million, for which ANZ paid cash of $269 million. Goodwill of $141 million was thus recorded for the premium paid and this likely relates to the acquisition of the final three RBS businesses, including the large retail banking base in Taiwan.