Details of RBS pain revealed by Treasury

The full extent of the Royal Bank of Scotland&rsquo;s stricken assets were made public yesterday, when the government published details of the insurance scheme set up to stabilise the bank. <br /><br />The Asset Protection Scheme (APS), which will insure &pound;282bn of the bank&rsquo;s assets, covers &pound;15.4bn of residential mortgages, &pound;80bn of loans, &pound;39bn of derivatives, and &pound;54.5bn of consumer finance, which also includes property-backed loans and loans to small businesses. <br /><br />The Treasury said that of the &pound;282bn of assets, &pound;114bn originated in the UK, with &pound;75bn in other parts of the EU, &pound;43bn in the US and &pound;48bn elsewhere in the world. <br /><br />The Treasury also confirmed the bank would have to bear losses of &pound;60bn on the assets before the government will step in. The government and the bank agreed in February to ring-fence assets that were turning sour. <br /><br />Financial services secretary to the Treasury Paul Myners said the agreement provided a &ldquo;much-improved&rdquo; position for the taxpayer. &ldquo;RBS will bear a much greater share of the burden, with the first loss increasing by &pound;18bn. The bank will also pay the full operational costs of the Asset Protection Agency,&rdquo; Lord Myners said.<br /><br />RBS is paying the Treasury &pound;45m for running the APS.<br /><br />The Treasury yesterday confirmed it would make a capital injection of &pound;25bn as part of the scheme. Following its approval, the government will effectively own an 84 per cent stake in the bank. <br /><br />The APS will also cover RBS&rsquo; spending on 120 aircraft leasing deals in North America, 47 oil tankers and 20 container ships, German office blocks and Australian infrastructure projects.<br /><br />Some of the foreign loans RBS made include a vast portfolio of loans to Irish and Northern Irish businesses and customers, including &pound;2.9bn worth of negative equity mortgages in Dublin and throughout Ireland.<br /><br />The bank also made &pound;3.1bn of loans to hedge fund managers, almost half of whom were based in the Cayman Islands and a third in the US.<br /><br />The government did not reveal whether any loans to Dubai, to which RBS is believed to have the greatest exposure of any UK bank, are included in the APS.<br /><br />Lloyds Banking Group was also planning to join the APS but is instead going ahead with raising private capital. It has paid the Treasury &pound;26m for its share of the costs of the APS.<br /><br /><strong>RBS involvement in the Asset Protection Scheme will insure &pound;282bn of the bank&rsquo;s assets</strong><br /><br /><strong>Including:</strong><br /><br /><strong>&pound;15.4bn</strong><br />of residential mortgages<br /><br /><strong>&pound;39bn</strong><br />of derivatives<br /><br /><strong>&pound;80bn</strong><br />of loans<br /><br /><strong>&pound;54.5bn</strong><br />of consumer finance*<br /><br />Of the &pound;282bn assets, &pound;114bn originate in the UK, with &pound;75bn from other parts of the EU, &pound;43bn in the US and &pound;48bn elsewhere in the world<br /><br />*which also includes property-backed loans and loans to small businesses.