The Government is today announcing the conclusion of discussions with Lloyds Banking Group and Royal Bank of Scotland regarding their participation in the Government's Asset Protection Scheme. As a result of improved market conditions and following extensive due diligence announced in February, the Government can today announce that: Lloyds will not participate in the APS and instead will raise additional private sector capital and pay a fee to the taxpayer for the implicit protection provided to date. This will reduce the risk borne by the taxpayer, improving value for money;
RBS will participate in the APS under revised terms that improve incentives and deliver better risk-sharing with the private sector. The likely costs to the taxpayer and the risks on the impact on the public finances have been reduced. Both banks will still be required to meet tough conditions on pay and lending set out below.
To promote greater competition in UK banking, and meet EU State Aid rules, the banks
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