EUROPEAN Commission approved a restructuring and impaired asset relief scheme for Britain’s Royal Bank of Scotland yesterday, saying the measures fell within state aid rules.
The Commission, the executive arm of the European Union, said RBS’s restructuring proposals should create a sustainable future for the bank, one of Europe’s largest financial services groups, which faced a severe liquidity crisis in late 2008.
Among the measures the bank is taking is a commitment to divest from all non-core and riskier business lines, including its insurance, transaction management and commodity trading operations, moves that will free resources for core banking.
“The Royal Bank of Scotland will take a number of significant steps to return to long term viability,” EU Competition Commissioner Neelie Kroes said in a statement.
“RBS will itself pay a sufficient share of the restructuring costs and distortions of competition will be limited by substantial divestments,” she said.
However, she warned that if RBS did not deliver on its targets for reducing its balance sheet by 2013, the Commission reserved the right to intervene again and request more divestments from the bank.