RBS plans more business sell-offs to ensure European approval

Published on Monday 2 November 2009 09:50

ROYAL Bank of Scotland will have to sell off more of its businesses than previously planned, the firm announced today.

• RBS expects to sell-off more of businesses than previously planned

The Edinburgh-based bank, whose subsidiaries include NatWest and Direct Line insurance, believes a greater scale of sell-off is necessary if the European Union is to agree the government's support package.

In a statement released today, RBS said negotiations over the sell-off were reaching a conclusion and involved "some divestments not initially contemplated".

The UK taxpayer will own an estimated 84 per cent of RBS once the bank insures hundreds of billions of pounds in toxic debt under the Government's Asset Protection Scheme (APS).

The bank had originally planned to place 325 billion into APS but the figure was revised to 270 billion to reflect improved economic conditions.

RBS, which said it was "close to agreement" with the Treasury, added: "RBS expects the agreement on the APS to reflect market improvements since February and RBS's ongoing recovery whilst giving protection against future potential stressed case losses."

RBS is poised to make further announcements on the APS and state aid agreement by Friday, when the firm unveils its third-quarter results.

Chancellor Alistair Darling yesterday confirmed plans for a carve-up of state-backed banks to increase competition in the sector as Northern Rock, RBS and Lloyds Banking Group are re-privatised.

Lloyds – 43% state owned – is expected to give details of its own fundraising plans to avoid the APS scheme tomorrow. It is likely to be forced into sell-offs including its Cheltenham & Gloucester branches