London: The Royal Bank of Scotland, under state control since the British government rescued it in 2008, announced Wednesday it was going to leave the asset protection scheme, a move that could be seen as the first step toward the bank’s reprivatisation.
The bank, which is 81-percent owned by the taxpayer after a vast bailout at the height of the global financial crisis, has been a member of the asset protection scheme (APS) since late 2009. It will leave on Thursday.
The scheme acted as an insurance policy for £282 billion ($455 billion, 347 billion euros) of the troubled group’s riskiest assets. The group added that it has now slashed those assets by 63 percent to about £105 billion since November 2009.
“The government’s strategy remains to return RBS to the private sector when it is of value for the taxpayer to do so. Today is a step in that direction,” said British finance minister George Osborne in reaction to the news.
Investors also welcomed the move, sending RBS shares soaring 2.22 percent to 286.04 pence in early trade on London’s FTSE 100 index of top companies, which was flat at 5,870.87 points.
“RBS is pleased to announce that it has agreed with HM Treasury to exit the UK government’s asset protection scheme effective 18 October 2012,” the Edinburgh-based bank said in a statement.
“The bank’s exit from the APS demonstrates the progress RBS has made in transforming a balance sheet that had become dangerously large and unstable into one that is more conservative, resilient and sustainable.”
RBS will have paid £2.5 billion ($4.0 billion, 3.0 billion euros) for its participation, without having made a claim under the scheme. It also paid about £1.5 billion to HM Treasury for liquidity support received during the finical crises.
The near collapse of Royal Bank of Scotland was a high-profile and highly controversial event which shocked Britain, outraged taxpayers and focused bitter media attention on bonuses and behaviour in bank boardrooms.
“We all want a system in which banks will never again need to seek credit support from government in a financial crisis,” said RBS chief executive Stephen Hester in Wednesday’s statement.
“Huge progress has been made towards that goal and our exiting the APS is a significant milestone in RBS’s recovery.
“The APS has played a valuable role, buying time for the bank as we implemented change from the worrying days of 2009 to create the much stronger institution it is today.”
He added: “The changes RBS needed to make after 2008 were truly radical. Much progress has been made along that road. There is much work still under way. But RBS and all who rely on us are better off for the strong progress already made.”
The Treasury also said on Wednesday that the asset protection scheme would now be closed.
RBS was the only British bank to join the scheme. Lloyds Banking Group, which is almost 40-percent state-owned after a similar bailout, had entered APS talks but decided against joining.
Since 2008, the British government has injected a massive £45.5 billion into RBS, which needed saving from the US housing market crash and a disastrous takeover of Dutch rival ABN Amro in 2007.
Earlier this year, in January, disgraced former RBS chief executive Fred Goodwin was stripped of his knighthood by Queen Elizabeth II over his role in the bank’s near-collapse in 2008.
The near collapse of Royal Bank of Scotland was a high-profile and highly controversial event which shocked Britain, outraged taxpayers and focused bitter media attention on bonuses and behaviour in bank boardrooms.
“We all want a system in which banks will never again need to seek credit support from government in a financial crisis,” said RBS chief executive Stephen Hester in Wednesday’s statement.
“Huge progress has been made towards that goal and our exiting the APS is a significant milestone in RBS’s recovery.
“The APS has played a valuable role, buying time for the bank as we implemented change from the worrying days of 2009 to create the much stronger institution it is today.”
He added: “The changes RBS needed to make after 2008 were truly radical. Much progress has been made along that road. There is much work still under way. But RBS and all who rely on us are better off for the strong progress already made.”
The Treasury also said on Wednesday that the asset protection scheme would now be closed.
RBS was the only British bank to join the scheme. Lloyds Banking Group, which is almost 40-percent state-owned after a similar bailout, had entered APS talks but decided against joining.
Since 2008, the British government has injected a massive £45.5 billion into RBS, which needed saving from the US housing market crash and a disastrous takeover of Dutch rival ABN Amro in 2007.
Earlier this year, in January, disgraced former RBS chief executive Fred Goodwin was stripped of his knighthood by Queen Elizabeth II over his role in the bank’s near-collapse in 2008.
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