RBS withdraws from APS

A woman walks past an RBS branch RBS will save large amounts of fees by withdrawing from the scheme

Royal Bank of Scotland has moved a step nearer financial rehabilitation and eventual privatisation by withdrawing from the Asset Protection Scheme, an insurance scheme created by the government in 2009 by which losses on RBS's worst loans and investments would have been taken by taxpayers.

In practice, RBS has been able to sell or offload the £280bn of loans and investments put into the scheme without having to transfer any losses to taxpayers. And it has paid £2.5bn for the protection.

But this does not mean the scheme represented bad value for RBS and its owners. Without it, RBS might have felt under pressure to clean itself up faster, which meant it might well have sold its bad loans far cheaper - and actually incurred even bigger losses than it has suffered in recent years.

By withdrawing from the scheme, with the agreement of the Financial Services Authority and the Treasury, RBS will be saving itself £500m a year in fees.

For the Treasury, the end of the APS can be seen as symbolising almost the end of one important form of support for banks that was put in place after the crisis of 2007-8: in March 2010, the Treasury had provided £486bn of insurance, loans and guarantees to the UK's banks (and at the peak in 2009, all financial support by British taxpayers for the banks was £1.2 trillion); as of today, that has fallen to £31bn.

However, if the UK's banks are no longer wholly dependent on taxpayer support to prevent them going bust, they are receiving significant financial help from the Bank of England - in the form of the Funding for Lending Scheme and the Extended Collateral Term Repo.

The purpose of the Bank of England's newer support is less to keep the banks alive, and more to provide them with funds so that they can provide the credit badly needed by businesses and households, and reinforce the UK's sporadic and anaemic economic recovery.

Robert Peston, economics editor Article written by Robert Peston Robert Peston Economics editor

Has government hurt education exports?

Higher education is a big British export success, but are government policies stunting its growth?

Read full article

More on This Story

Related Stories


This entry is now closed for comments

Jump to comments pagination
  • rate this

    Comment number 105.

    AAR has rights to match any offer by Rosneft. But it does not look as though AAR will exercise that right, given that it has signed a memorandum of understanding to sell its holding to Rosneft.

    Always best to hedge your bets so why would they not put in a counter offer which could boost the price Rosneft have to pay for acquisition of the whole of the company?
    It depends on who blinks first.

  • rate this

    Comment number 104.


    We clearly need more, smaller banks. But there's a balance to be had. A huge plethora of small banks would be even harder to regulate and it's very difficult to have 'small' banks due to the regulatory requirements. They would be very vulnerable.

    The way forward is 'not too small, but small enough to fail' size.

    Remember many smaller banks, especially in the USA, did fail.

  • rate this

    Comment number 103.

    Which, if GO should ever be in Government again, will make his problems with the Benefits bill ever worse!

    He's been very short-sighted on that one ...

  • rate this

    Comment number 102.

    99.SweetChariot81 - ".....It reduces the value of the pound and increases the competitiveness of our exports......"

    Which is why exports to other EU states have gone up by 8% since the election, though that still doesn't stop the Coalition blaming Eurozone woes for our woes......

  • rate this

    Comment number 101.

    99 & 100. Not to mention persecuting the savers and pensioners by devaluation and eroding their purchasing power after they have been prudent over the years... a lovely gift for those who have put into the system all their lives.... printing money wouldn't be so bad if it had been distributed to the populace instead of giving it to the financial plutocrats to prop up a failed system and bonuses.

  • rate this

    Comment number 100.

    If all QE did was reduce £ value, it would be shooting UK PLC in both feet.

    Low £ makes exporters complacent, it doesn't really help them. Has been problem for 50 yrs.

    Low £ has also fuelled inflation just when we did not need it. Current % price increases are probably worse than RPI/CPI shows & that hits business & jobs hard.

  • rate this

    Comment number 99.

    Is QE really so bad for the UK populace? It reduces the value of the pound and increases the competitiveness of our exports which is much needed since the BoP, so crucial to our survival, is significantly in the red just now......

  • rate this

    Comment number 98.

    So yet again we see the BoE covering its bets :
    we may be coming out of recession or
    the worst is yet to come or
    it might stay the same for a couple of years.

    well i can honestly say that covers all the bases and all on this board could have come up with the same statements.

    Just what credibility does this organisation think it has ? who are they thinking is listening ?

  • rate this

    Comment number 97.

    If Steven Hester didn't anticipate that Santander might not go through with the branches deal in the end, he should have had a plan B.
    Presumably Plan B (with maybe some encouragement from Merv), would have been to break up RBS into 2 pieces. That might have allowed pressure to build to split Lloyds/BoS back into two as well.
    For, presumably, we are still trying to do something about TooBigToFail

  • rate this

    Comment number 96.

    Sutara - I admire your faith in the EU and its arbitrary judgement of optimal bank size. Personally I have slightly less faith and believe a failure of current RBS minus its 300 branches would have greater repercussions than the failure of Lehmans.

    No, if a bank has to be an OK size to fail I think it has to be absolutely tiny - much smaller than Northern Rock.

  • rate this

    Comment number 95.

    92.Sanchez-Missing You

    So, what makes you think the Bank Of England is any different ;-)

  • rate this

    Comment number 94.


    There's a quite often argued stance that the RBS should be put back into private ownership a.s.a.p. so that the Gov't can get back some of the taxpayers' money that was put into it.

    Which seems like not a bad idea to me.

  • rate this

    Comment number 93.


    To be no longer 'too big to fail', they would probably have to reduce to the size required by the EU with the compulsory sell-off of branches, etc. Which I think is a good idea.

    Of course the next category down - 'so big as to still cause a lot of mess if they fail' - is not without its problems for the economy, the banking industry and the mere mortals of the UK too.

  • Comment number 92.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 91.

    Robert. How does this "steady away" from RBS figure with the BoE Tucker's remark -

    The "worst may still be ahead" for the banking system, the Bank of England's deputy governor has told a gathering of leading bankers.

    Somebody is deluding themselves.

    Which one?

  • rate this

    Comment number 90.

    Does this mean that if Tucker is wrong:


    RBS won't be bailed out in future?

    LOL, bend over and take it like the plebs you are.

  • rate this

    Comment number 89.

    Not a mention of Mr Hester who is doing a fine job on behalf of the taxpayers and RBS, well done Sir.

  • rate this

    Comment number 88.


    "as a number of funds enter the non-agency mortgage-bond market where there are "billions of bonds trading a week and they are hotly debated" which creates opportunity from different valuations"

    still creating money from thin air.... just like the BoE. Beggars belief.

  • rate this

    Comment number 87.

    True, splendidhashbrowns, RBS and others are still too big to fail. But can anybody please tell me what size RBS would have to be (number of branches, assets, number of customers, etc) for it to be the right size to fail and which bank or building society they think is already the right size and could be left to fail now. And who would want to bank with one that's identified as OK to fail?

  • rate this

    Comment number 86.

    all these financial shenanigans makes my head spin!
    The truth is that RBS (and others) are still too big to fail. Nothing has been done by Labour or Condems to obviate this risk. Nobody has been prosecuted for bank fraud. Teresa May is desperately trying to change the extradition laws to protect all the crooked bankers involved in the LIBOR scandal (fraud).
    French revolution anyone?


Page 1 of 6



  • chocolate cake and strawberriesTrick your tongue

    Would this dessert taste different on a black plate?

  • Duke and Duchess of Cambridge and Prince George leaving New Zealand'Great ambassadors'

    How New Zealand reacted to William, Kate - and George

  • Major Power Failure ident on BBC2Going live

    Why BBC Two's launch was not all right on the night

  • Front display of radio Strange echoes

    What are the mysterious sequences of numbers read out on shortwave radio?

  • A letter from a Somali refugee to a Syrian child'Be a star'

    Children's uplifting letters of hope to homeless Syrians

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.