Branches to be sold in banking shake-up

ANOTHER major shake-up of the UK’s banking industry has been announced  with Royal Bank of Scotland and Lloyds Banking Group to sell off bank branches.

RBS will sell 318 branches, while Lloyds will dispose of more than 600 branches over the next four years.

Lloyds, which bought Halifax-based HBOS last year, also confirmed it would stay out of a government-run insurance scheme.

Lloyds, which is 43.5%-owned by the government, will instead raise £21bn, including a £13.5bn rights issue and a £7.5bn debt swap.

But it will have to pay the UK government £2.5bn to avoid joining the Government Asset Protection Scheme (GAPS), which provides state insurance for past toxic loans, for the “implicit protection” already provided by the taxpayer.

RBS has confirmed it will participate in the scheme on revised terms, the Treasury said.

The sales have been demanded by the European Commission to safeguard competition concerns after the two were bailed out by the UK government.
 
“The likely costs to the taxpayer and the risks on the impact on the public finances have been reduced,” the Treasury said.

There have been concerns that the moves could lead to job losses across the UK and in Yorkshire.

In addition to the sales of RBS branches in England and Wales, RBS will sell its NatWest brand in Scotland, RBS Insurance and Global Merchant Services, its card payment business.

The total disposal will be 318 branches in the UK, or 14% of the RBS retail network.

Lloyds will sell at least 600 branches, or about 4.6% of the total market share of UK current accounts.

That includes the TSB brand in England, Wales and Scotland and mortgage broker Cheltenham & Gloucester, as well as the Intelligent Finance online business.

Lloyds says the businesses that it will have to sell off account for about £30bn of customer deposits and £70bn of lending, generating income of £1.4bn in the year to December 2008.

Unlike Lloyds, RBS will join GAPS and have £282bn of its assets insured by the taxpayer.