Subject to final EC approval, LBG will sell its Lloyds branches in Scotland, its Cheltenham & Gloucester branches and its Intelligent Finance online business, according to a LBG spokesperson.
RBS hopes to offload its NatWest branches in Scotland, as well its RBS-branded branches in England and Wales, the Churchill and Direct Line insurance arm and parts of its investment banking business. However, this is also subject to final EC approval.
The restructuring plans are designed to promote greater competition in the UK banking sector and to meet European Commission (EC) fears over unfair competition as a result of state aid received by the two banks.
To ensure these divestments increase diversity and competition in the UK banking market, the assets can only be sold to small or new players in the market. The divestments from each bank will together represent nearly 10% of the UK retail banking market.
LBG will not have to participate in the Asset Protection Scheme (APS), the insurance scheme designed to help banks with bad loans, as it will raise additional private sector capital. This will see the Government’s shareholding in Lloyds remain at 43%.
However, RBS will participate in the APS. The Government’s economic interest in RBS will rise from 70% to 84%.
Both banks have also agreed to a clamp down on bonuses in exchange for more taxpayers’ money.
