RBS 'close' to agreement on toxic asset insurance
Monday, 02 November 2009 09:02
The Royal Bank of Scotland (RBS) today revealed it was close to an agreement on the government asset protection scheme (APS), but it may have to sell off more assets.
The bank revealed in a statement it was "close to agreement with HM Treasury with respect to its proposed participation in the APS".
The APS provides insurance on so-called toxic assets for the lender, which would take the first hit on losses.
RBS has been trying to renegotiate the terms of the deal to "reflect market improvements since February and RBS's ongoing recovery, whilst giving protection against future potential stressed case losses".
RBS - 70 per cent owned by the state - also revealed it will have to sell-off more assets than previously thought to meet European state aid rules.
"Negotiations between HM Treasury and the European Commission are in their final stages and will include some divestments not initially contemplated," the lender revealed.
"It remains RBS's goal that any required divestments do not threaten its recovery plan which is already underway."
A final announcement from RBS is expected before its third quarter results on Friday.
The announcement comes after a weekend of feverish speculation over the fate of both RBS and Lloyds Banking.
Chancellor Alistair Darling revealed the banks would be sold off "when the time is right and the price is right" over the next three to four years.
He called for Lloyds and RBS to be split up with some branches and divisions sold off separately to provide greater competition on the high street.
Reports suggest TSB could be cut off and sold from Lloyds Banking and RBS could lose cut off branches under the Williams & Glyn brand.
The Scotsman reports a group of Scottish businessmen are already in talks to by TSB and relaunch it as TSB Scotland.
In early trading, the RBS share price was down 5.89 per cent to 39.45p.
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