The UK government, in consultation with UK Financial Investments, has agreed to convert the Treasury’s preference share investment in the Royal Bank of Scotland Group to ordinary shares, with the aim of supporting stability in the financial system, ensuring continued protection for depositors and borrowers.
According to the Treasury, this action is intended to make available additional core tier one capital to the bank to strengthen its resources, enable it to absorb expected losses and permit it to restructure its finances and give the bank the opportunity to build its capital further so that it is able to maintain and increase its support for the real economy by facilitating GBP6 billion more lending to industry and homeowners, over and above existing commitments.
According to the agreement, the UK government is not injecting new money into the Royal Bank of Scotland Group (RBS).
As part of its agreement, the government has agreed with RBS commitments including: the extension to large corporate of the existing agreement to maintain, over the next three years, the availability and marketing of lending to homeowners and to small businesses at 2007 levels or above; and increasing lending still further by GBP6 billion in the next 12 months.
