The U.K. government is giving Royal Bank of Scotland Group PLC another 25.5 billion pounds in capital to help it stay afloat. The government's total bailout of the bank now equals 45.5 billion pounds or about 74 billion dollars. It has become the costliest bailout of any bank worldwide.
The government now owns a 84.4 percent stake in the bank, which suffered major losses after acquiring the ABN Amro businesses in 2007. The WSJ (subs. req'd) reports:
RBS said over the next four years it will sell off its insurance arm--probably through an initial public offering--and divest its global merchant services unit and its interest in commodities trading joint-venture RBS Sempra Commodities, collectively accounting for GBP 5.7 billion of RBS' GBP 26.9 billion revenue in 2008.
In addition, it will sell branches operating under the RBS brand in England and Wales, its NatWest branches in Scotland, and the accounts of some small and medium business customers across the U.K., totaling about 2 million customers and GBP20 billion in assets.
The U.K. government is aiming to have these bought by a new entrant in U.K. banking, to make the sector more competitive.
Meantime, another large British bank, Lloyds Banking Group, says it plans to tap investors in an effort to keep the government from taking a majority stake. The bank hopes to raise nearly 21 billion pounds, to keep the government's stake at 43 percent.