RBS last week revealed record losses of £24.1bn, made up of goodwill writedowns as a result of its ABN Amro acquisition and market and impairment losses. It also revealed that it will submit £325bn of assets to the guarantee scheme.
It will bear the first £19bn of losses and the Government would bear a further £13bn of losses on its behalf. RBS has pledged to lend £25bn in business loans and mortgages in 2009 as part of the exchange.
Speaking at last week’s Treasury select committee, Bank of England governor Mervyn King said that as a result of continuing Government intervention, RBS was effectively nationalised.
He said:”It can be argued now that the Government owns more than 50 per cent of the equity of the bank. I do not see a significance difference between that and outright nationalisation.”
Lloyds Banking Group set out its 2008 results, detailing losses of £10.8bn mainly due to the acquisition of HBOS. Profits fell by 80 per cent to £807m.
It has admitted it is in talks with the Government concerning its participation in the asset guarantee scheme and could ask for guarantees for as much as £250bn of its assets.
City minister Lord Myners said scheme deals were to be bespoke and would differ from bank to bank.