RBS said it intends to put GBP325 bln worth of assets into the U.K. government's protection scheme. This is far more than the market estimate for GBP250 bln of RBS assets to be insured, and highlights the large amount of toxic assets on the bank's books. RBS, owned to 68% by the U.K. government, reported losses of GBP7.9 bln before goodwill write-downs, with with GBP16.2 bln in goodwill write downs associated with acquisitions, including the takeover of ABN Amro. As previously announced, the bank is to split up in two, with about 20% of assets, or GBP240 bln, to be shifted into a non-core division for disposal or to be run down.
The U.K. Treasury is expected to announce details of its bank rescue scheme, announced last month, including details on the government's asset protection scheme. Nervousness yesterday ahead of the announcement added downward pressure on Gilts as some players were getting out of Gilt positions. Analysts expect RBS and Lloyds Banking Group to insure between GBP200-250 bln each through the asset protection scheme. Darling said Monday that in return for the opportunity for banks to insure themselves against losses on their riskiest assets, the government has "made it clear that we expect the banks to enter into legally binding, specific and quantifiable agreements to increase the amount of credit in the economy".
Meanwhile, RBS is expected to report a loss of GBP28 bln today at 7.00GMT, the largest in U.K. corporate history. Around GBP20 bln is expected to in write downs of goodwill associated with acquisitions, including the takeover of ABN Amro. RBS is set to split up in two, with a non-core division into which toxic and unwanted assets, including banking operations in Asia and Australia - inherited as part of last year's ABN Amro deal. About GBP300 bln worth of assets are to be up for sale, while some 20k jobs could be axed (less than 10% of its 220k worldwide staff). RBS and Lloyds Banking group are expected to put in some GBP200-250 bln of toxic assets each into the government's asset protection scheme, due to be unveiled today.
Al Bawaba
