Progress for RBS as it drops state insurance cover

Tim Wallace
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STATE-BACKED bank RBS yesterday exited the scheme set up to insure its toxic assets at the height of the financial crisis, indicating the lender and regulators have confidence that it is moving back to health.

The Asset Protection Scheme (APS) was established to backstop a £282bn portfolio of risky loans and investments, as part of the wider bailout and plan to turn the broken bank around.

But in the event the bank did not need to claim on the APS, and has now quit the scheme as soon as was contractually possible.

By selling off and running down assets, RBS has reduced the portfolio in question to £105bn – 63 per cent below its original size.

RBS paid the Treasury a total of £2.5bn for the cover, as well as roughly £1.5bn for liquidity support during the crisis.

Bank chief Stephen Hester said the move shows the bank has come a long way in turning itself around in the past four years.

“We all want a system in which banks will never again need to seek credit support from the government in a financial crisis,” he said.

“Huge progress has been made towards that goal and our exiting the APS is a significant milestone in RBS’ recovery.”

And chancellor George Osborne welcomed the move, as it reduces taxpayer exposure to the bank.

“During this parliament the support provided by the taxpayer to the banks in the form of guarantees has fallen by almost 95 per cent.”

RBS shares rose 1.82 per cent on the announcement.