A new government-backed agency named The Asset Protection Agency was launched to monitor the GBP240 billion of Royal Bank of Scotland’s toxic assets that will be insured by the government’s asset protection scheme, reported the Financial Times.
Working on behalf of the Treasury, the agency will have the power to veto the decisions made about the insured assets, if it believes the bank is not extracting their maximum value. It can also able to block the sale of the assets, if it feels the price is too low and sell them to an external firm.
Paul Myners, secretary of financial services to the Treasury, said: “The Government’s decisive action to stabilise the financial system has succeeded in protecting the savings of British families. We have strived throughout our interventions to ensure maximum value for the taxpayer, charging commercial rates for our support for the banks and making supported firms pick up the tab for extra operating costs.
“The agreement we have reached with RBS follows this approach. This final agreement sees a much-improved position for the taxpayer compared to the initial deal announced in February. RBS will bear a much greater share of the burden, with the first loss increasing by GBP18 billion. The bank will also pay the full operational costs of the Asset Protection Agency.
“Together with the exit of Lloyds from the APS, taxpayer exposure to bank losses has been markedly reduced. With this agreement entering into force with State Aid approval expected soon, our focus can turn to reforming the financial system for the future, both with greater competition on the High Street, and stronger global and domestic regulation.”
