Britain’s Royal Bank of Scotland said Monday it will consider selling more assets than initially planned to win EU support for the state aid received by the group, sending its shares plunging.
The embattled company, which is 70-percent owned by the taxpayer after a huge bailout last year, added it was close to an agreement over the terms of its participation in a government scheme to insure toxic or high-risk assets.
Media reports had suggested on Sunday that RBS could be forced to sell its Churchill and Direct Line insurance division and part of its investment banking arm, to allay European Commission (EC) concerns about state aid.
“With respect to the EC, negotiations between HM Treasury and the EC are in their final stages and will include some divestments not initially contemplated,” RBS said in a statement.
“It remains RBS’s goal that any required divestments do not threaten its recovery plan which is already underway.”
The group added: “RBS notes recent speculation in the media on both the terms associated with RBS’s proposed participation in the Asset Protection Scheme (APS) and the state aid measures which are to be agreed with the EC.”
“RBS believes it is close to agreement with HM Treasury with respect to its proposed participation in the APS.”
Also over the weekend, British finance minister Alistair Darling had outlined plans to create three new high street banks from bailed-out lenders RBS, Lloyds Banking Group and Northern Rock.
Darling, the Chancellor of the Exchequer, said the three existing lenders would be broken up and parts sold in the next few years to new entrants to the sector, who would concentrate on deposits and mortgages.
