Rescued Banks Face Crunch Day
Thursday, November 5, 2009 6:06British banks saved by the taxpayers face a day of reckoning today, with plans to break up the RBS and Llyods Banking Group set to be revealed.
The duo are under orders from the European Commission to sell off parts of their business to ensure there is enough competition for customers in the market. It is hoped that the sales will help tempt new entrants and create three new players to raise competition as the sector gradually recovers from the crisis. RBS could have to sell branches in England and Wales, its Churchill and Direct Line insurance arm and parts of its Global Banking and Markets investment banking business.
Lloyds is likely to have to offload its Cheltenham & Gloucester branches, its Intelligent Finance online business and Lloyds TSB branches in Scotland. The bank is also set to unveil a £21 billion fundraising plan to avoid a taxpayer-backed insurance scheme for toxic debts. Bosses are keen to stay out of the Asset Protection Scheme to prevent the government stake rising higher.
RBS is expected to place about £280 billion in bad loans into the APS, taking the government’s stake to 84%. It’s said that the amount of disposals required will be bigger than ‘initially contemplated’.
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