Britain announced plans yesterday to break up state-rescued banks Royal Bank of Scotland Group PLC (RBS) and Lloyds Banking Group PLC to address EU competition concerns, and pump about £30 billion (US$49 billion) into the pair.
“To promote greater competition in UK banking, and meet EU state aid rules, the banks will ... be required to make divestments of significant parts of their businesses over the next four years,” the Treasury said in a statement.
Under the plans, the British government will pump another £25.5 billion into RBS.
RBS also said it would place £282 billion of high-risk debt into the government’s toxic asset insurance scheme. RBS will pay a fee of £700 million a year for three years, and £500 million a year for the life of the insurance, rather than the upfront fee of £6.5 billion agreed on in February.
The developments will see the government’s economic interest in RBS climb to 84 percent and its voting rights rise to 75 percent.
Lloyds Banking Group meanwhile unveiled plans to raise at least £21 billion of new funds through a rights issue and a debt swap. It will pay a £2.5 billion fee for avoiding the state toxic asset plan. The government, which said it would participate in the fundraising, will retain a 43 percent stake in Lloyds.
“Lloyds will not participate in the APS and instead will raise additional private sector capital and pay a fee to the taxpayer for the implicit protection provided to date,” the Treasury said. “This will reduce the risk borne by the taxpayer, improving value for money.”
RBS said in a separate statement that it would sell its branch network in England and Wales and NatWest branches in Scotland, and also dispose of RBS Insurance, Global Merchant Services and its stake in RBS Sempra Commodities to meet EU conditions for receiving state aid.
Lloyds said it would dispose of its TSB brand, Scottish TSB branches and some other TSB branches in England and Wales. In addition, it said it would sell the branches, savings accounts and branch-based mortgages of its Cheltenham & Gloucester unit.
Both banks have agreed not to pay discretionary bonuses for last year’s performance to any employee who earns more than £39,000 per year, and members of both boards agreed to defer all bonuses for last year until 2012, the Treasury said.
The Treasury added that it had reached agreement “in principle” with EU Competition Commissioner Neelie Kroes over the restructuring.
Taiwan’s Lee Chia-hao (李佳豪) on Sunday won a silver medal at the All England Open Badminton Championships in Birmingham, England, a career best. Lee, 25, took silver in the final of the men’s singles against world No. 1 Shi Yuqi (石宇奇) of China, who won 21-17, 21-19 in a tough match that lasted 51 minutes. After the match, the Taiwanese player, who ranks No. 22 in the world, said it felt unreal to be challenging an opponent of Shi’s caliber. “I had to be in peak form, and constantly switch my rhythm and tactics in order to score points effectively,” he said. Lee got
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