RBS close to exit from government insurance scheme

The Royal Bank of Scotland is on the verge of making a symbolic departure from an 'essentially worthless' government insurance scheme, The Times has said.

The newspaper reported on Thursday that the Treasury agency that runs the scheme, the Asset Protection Agency, has informed staff they will soon no longer have a job and should prepare to be made redundant or relocated.

Sources have revealed that RBS, which has previously told its investors it wants to be free from the agency by the year-end, is now planning its exit for around mid-October.

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As of that time, the scheme will have received £2.5bn in premiums from the company, the amount it agreed to pay in return for protection when first joining the scheme three years ago.

Stephen Hester, the Chief Executive of RBS who recently described the scheme as "essentially worthless", previously told The Times that, "there is a very big cushion before the insurance kicks in in terms of the first-loss provision, and neither we nor the asset protection industry can conjure up the scenario where that cushion is exhausted".

Departure from the scheme will require the approval of both the Treasury and the Financial Services Authority, both of which are expected to give their consent.

NR