Lloyds and RBS cut down to size [View All]

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Source: BBC

Royal Bank of Scotland (RBS) and Lloyds Banking Group are to sell off hundreds of branches in another major shake-up of the UK banking industry.

The sales have been demanded by the European Commission to safeguard competition concerns after the two were bailed out by the UK government.

RBS will sell 318 branches, while Lloyds will dispose of more than 600 branches over the next four years.

The Conservatives said another £40bn was being added to the bail-out.

Lloyds, which is 43.5% owned by the government, also confirmed it would stay out of a government-run insurance scheme and would instead raise £21bn, including a £13.5bn rights issue.

But it will have to pay the UK government £2.5bn to avoid joining the Government Asset Protection Scheme (Gaps), which provides state insurance for past toxic loans.

The payment is to cover the "implicit protection" provided by the government since it first offered to insure Lloyds' book in February.

RBS, meanwhile, has confirmed it will join the scheme on revised - and more expensive - terms, the Treasury said.





Read more: http://news.bbc.co.uk/2/hi/business/8339371.stm