Page last updated at 00:05 GMT, Tuesday, 3 November 2009

RBS and Lloyds set for sell-offs

RBS headquarters in London
RBS is expected to sell off branches in England and Wales

Royal Bank of Scotland (RBS) and Lloyds Banking Group are due to announce plans to set up new banks from their existing branches and sell them off.

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

RBS is expected to sell branches in England and Wales, and its Churchill and Direct Line insurance businesses.

Lloyds is likely to offload its Cheltenham & Gloucester branches.

In addition, Lloyds is expected to unveil plans to sell its Intelligent Finance online business, and Lloyds TSB branches in Scotland.

Both banks will probably have to sell off the bank branches and other businesses within four years.

Scaled down

Lloyds, which is 43.5% owned by the government, is also predicted to say it will raise more than £20bn from investors in return for staying out of the Asset Protection Scheme, the state-run insurance scheme to cover toxic loans.

This will be a big day for British banking, the latest chapter in the bailout saga
Hugh Pym, BBC chief economics correspondent

The bank is thought to want to avoid the additional government influence that comes with the scheme, and is prepared to pay the government a fee of close to £2.5bn to avoid it.

Meanwhile, RBS is tipped to put about £280bn into the scheme, a move that could see the government's stake in the bank increase from the current 70% to 84%.

Full details of both RBS and Lloyds plans are due to be announced by both banks and the Treasury.

The European Commission has demanded that banks bailed out by taxpayers should be scaled down.

"This will be a big day for British banking, the latest chapter in the bailout saga," says BBC chief economics correspondent Hugh Pym.

However, he says that it "remains highly uncertain" that the asset sales will attract new players into the banking market.

Job cuts

In another development, RBS said on Monday that it is to cut 3,700 jobs across its UK branches, adding it hoped to achieve most through voluntary redundancy.

The jobs are to go over the next two years.

RBS said it was over-staffed compared with competitors and needed to trim costs, and that the cuts were unconnected to Tuesday's planned announcements.

The firm has already unveiled 10,000 job cuts in its investment banking and back office activities in the UK, and a further 6,000 redundancies in overseas operations.

It has a total workforce of 170,000, of which 105,000 are in the UK.



Print Sponsor


RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific