TAXPAYER support for Royal Bank of Scotland (RBS) was formally reduced by a further £8 billion yesterday after the removal of a back-up scheme a year earlier than planned.
RBS said that the Prudential Regulatory Authority had now approved the termination of the Contingent Capital Facility (CCF) with the Treasury.
A spokesman for the bank described it as “another important milestone in the bank’s recovery from the 2008 financial crisis”.
He added: “It is further evidence of the progress we have made in making RBS safer and stronger, with dramatically improved liquidity and capital positions.”
Following termination of the CCF, the outstanding final annual fee of £320 million under the scheme is no longer payable.
The CCF facility, set up in 2009, acted as an additional debt buffer that would switch into equity if the bank’s core tier one ratio fell below 5 per cent.
Plans for the cancellation of the facility were announced last month as RBS unveiled the rapid wind-down of £38bn of toxic loans, while slashing costs.
The 81 per cent taxpayer-owned lender avoided a full split into a “good” and “bad” bank as a UK government-commissioned report concluded that it would do more harm than good. Instead, RBS will create an internal bad bank of problem assets to be run off over the next three years.