Saturday 23 March 2019 12:24 pm

RBS to wind down £1bn worth of local council lobos loans by end of 2019

The Royal Bank of Scotland (RBS) will attempt to wind down £1bn of controversial bank loans given to local councils across the UK. 

The move comes after criticism from campaigners and shadow chancellor, John McDonnell, who claimed that high payments had led to a diversion of cash from council services. 

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RBS is looking to wind down the loan porfolio by the end of 2019, the Guardian reported, stating that the main method used to execute this process would be through loan redemptions. 

It will allow the local authorities to pay back their loans earlier than the contracts dictate.

Both RBS and Barclays, which made a similar move in 2016, have faced a string of lawsuits over the loans. 

Activists have estimated that the cancellation of lender loans or lobo loans could save around £16bn in taxpayers money over the next 40 years. 

Councils in Kent, Northamptonshire, Birmingham, Sheffield and Newcastle are among those to have agreed to exit their contracts early. 

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An RBS spokesperson told the Guardian: “Whilst we can’t discuss individual cases, a number of our local authority customers hold legacy, long-dated, lobos loans.

"We work on a case-by-case basis with all our customers and, as ever, arrangements are confidential. We value all our customers and are open to discussing restructuring or refinancing of such loans where beneficial for the customer.”