Government insurance scheme ‘may be unaffordable for RBS’
Wednesday 18th February 2009, 2:21PM GMT.
Royal Bank of Scotland could struggle to find enough cash to pay for the government’s insurance scheme, according to an analysis of the cost.
The Daily Telegraph has speculated the cost of putting £200 billion toxic assets into the scheme, which would share the risks with the taxpayer, could total £8 billion based on a potential one-off fee of four per cent.
The bank, which is 70 per cent taxpayer-owned, is said to be in discussions with the Treasury on how it could pay the fee.
RBS is expected to announce record losses of £8 billion when it releases its full-year report on February 28th.
Other banks also face large fees for taking advantage of the asset protection scheme, which will see banks facing the first ten per cent of losses on assets, with the government shouldering most of the remainder for a fee, thought to be three or four per cent.
According to the Telegraph, RBS is considering paying the fee by issuing preference shares to the government, although these would come with a high price themselves – last year the government charged banks 12 per cent interest on the shares when it injected capital into the sector.
RBS declined to comment on the report.
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