RBS leaves asset protection scheme

The Royal Bank of Scotland is set to leave the government insurance scheme that was set up at the height of the financial crisis to protect the company from collapse.

Analysts said this could pave the way for RBS to be sold back into the private sector.

It is currently 82%-owned by the UK taxpayer after receiving a £45bn bailout in 2008.

RBS put £282bn of assets into the Asset Protection Scheme (APS) in November 2009, which then acted as a backstop to the bank's most risky assets.

Those assets had since fallen to around £105bn, the bank said, with many being sold or written off.

The bank said exiting the scheme showed "the progress RBS has made in transforming a balance sheet that had become dangerously large and unstable into one that is more conservative, resilient, and sustainable".

It will formally leave the scheme on Thursday.

RBS said it had paid £2.5bn for its participation in the APS, without having made a claim, in addition to around £1.5bn it paid to the Treasury for liquidity support received during the financial crisis.

It said the scheme had played an important role in stabilising market perceptions of RBS, giving the bank's new board and management time to put a recovery plan into effect.

In February 2009 the bank's shares had fallen to an all-time low of 10p as panic swept markets.

Group Chief Executive Stephen Hester said "huge progress" had been made towards creating a system in which banks would never again need to seek credit support from government in a financial crisis.

"RBS's capital, liquidity, and funding positions have been transformed in the past three years, so the time is now right for us to exit this scheme," he said.

Lloyds Banking Group paid £2.5bn to exit the scheme in November 2009 and instead raised additional capital from shareholders.