Royal Bank of Scotland is to withdraw this week from an insurance scheme set up during the banking crisis to cover its riskiest loans, having paid the minimum required in premiums.
The bank’s payments into the Asset Protection Scheme (APS) are expected to have reached £2.5 billion on Thursday, enabling it to ask the Treasury and the Financial Services Authority for permission to opt out, thereby saving it £500 million a year.
Exiting the APS would mark a significant milestone in the recovery of RBS and help clear the way for an eventual sale of the government’s 82 per cent stake.
The APS capped potential losses on £282bn of RBS’s most toxic assets following the bailout. RBS, which hasn’t made a claim through the scheme, has since shed most of those assets and recently said the APS was now “essentially worthless” in terms of providing cover.