Economy
RBS, Lloyds Banking Group offer profit to Government |
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| Economy | |
| Written by Roberta Murray | |
| Friday, 23 July 2010 | |
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£5 billion profit from the toxic asset insurance scheme used by RBS.
RBS (LON:RBS) is set to yield profit to the tune of £5 billion to the Government from the toxic asset insurance scheme used to prop it up at the height of the financial crisis in 2008. APA chief Stephan Wilcke, put the stronger performance down to record low interest rates and any further wobbles in the financial markets could easily disrupt the progress made. He also criticised RBS for the quality of its financial analysis and its internal risk procedures, claiming these are not up to the standard the APA would like. According to figures in its first annual report, APA is now forecasting that lifetime losses on the portfolio will total £57 billion. This is £3 billion below the scheme's excess threshold of £60 billion when the government assumes 90% of the losses. RBS, which will report its second quarter results on 6 August, has long said it does not expect to make a claim under the scheme. At the end of March the losses under the scheme £30.5 billion although these are expected to peak between 2012 and 2014. It is paying an annual fee of £700 million for the first three years and £500 million a year thereafter until the scheme winds up in 2099. However, it has the option of leaving the scheme as long as it has paid £2.5 billion in fees and repaid any payment it has received. Wilcke believes the bank is likely to exit the scheme in 2012. |
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