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'Bruised' bank gets £25bn more from the taxpayer
THE Treasury is to pump another £25.5bn of taxpayers' money into beleaguered Royal Bank of Scotland with the promise of another £8bn if needed.
RBS has agreed to sell key parts of the business to secure the bail-out, including its insurance arm, RBS branches in England and Wales and NatWest branches in Scotland.
The group is to sell 318 bank branches under the revived Williams & Glyn's brand name.
RBS will be the only bank to take up the Government's Asset Protection Scheme (APS) and analysts said it was paying heavily for it.
The bank's chief executive Stephen Hester, who was brought in after the bank's fall from grace, said: "We do feel bruised by what we've had to go through. Our job of turning around RBS has been made more difficult by some of the aspects of the EU settlement, but nevertheless we believe it is a do-able job."
RBS will also be forced to sell off its card payment business Global Merchant Services and its interest in RBS Sempra Commodities. It will also have to shrink its investment bank.
Shares in RBS, one of the top recipients of bail-out funds globally, closed down seven per cent at 35.9p, well below the average price of 50.5p paid by the Government for its stake.
Simon Maughan, analyst at MF Global, said: "Rather than spread the pain evenly, the decision has been made to cut Lloyds some slack and throw RBS to the wolves."
But RBS did manage to secure more flexible APS terms than expected earlier this year, and said it would be able to leave the scheme within four years.
It will see the Government's stake in the bank rise to 84 per cent.
It said it expected buyer interest for the assets and was considering an initial public offering for RBS Insurance, which it has put on the block before.
The group will have up to five years to make the sales.
The sales represent 14 per cent of RBS's UK banking network and will reduce its retail market share by two per cent. Its share of the small business banking market will fall by five per cent.
The RBS retail banking businesses on the block include 6,000 staff and 1.7 million customers – including 230,000 small business customers – and 20bn in assets.
RBS confirmed plans to place 282bn in toxic debts into a taxpayer-backed insurance scheme, taking the Treasury's stake to 84 per cent.
It will receive 25.5bn from the Treasury – although the bank will also be able to call on an extra 8 bn if needed.
RBS insurance division: Who might be interested?
European insurers:
n Zurich Financial Services AG
n Generali SpA
n Allianz SE
US insurer:
n Allstate Corp
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Sunday 12 February 2012
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