RBS 'to move away from asset protection scheme'

Monday 21st September 2009

The Royal Bank of Scotland (RBS) has said it is looking to move away from the government's asset protection scheme (APS).

Just last week Lloyds Banking also made a similar move to edge out of toxic insurance.

RBS, which is 70 per cent owned by the state, is reported to be looking at raising as much as £4 billion from share holders as an alternative to the APS. Under the scheme, the banks would take the initial hit on losses from toxic assets, with the tax payer covering the rest.

RBS have refused to comment on the reports, but a spokesperson said there were meetings with investors ahead of joining the APS "to assess investor appetite" but any deal was a long way off. She added any share issue would be "modest".

However, the cost of the insurance scheme – which could see both Lloyds and RBS handing over greater stakes to the government – is considered to be too high. It is estimated the government holding of RBS could go as high as 84.5 per cent.

The RBS share price remains heavily depressed, but has risen from the level of 10p in January to now over 56p.

The rise in the share price, it is hoped, suggests investors may have a greater interest in investing in RBS.

The bank, however, is not looking to step away from the APS completely, but limit its exposure to the scheme.

In early trading today, the RBS share price was down 1.95 per cent to 55.20p.

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