Government takes on toxic assets

The Treasury has launched a taxpayer-backed asset protection scheme, aimed at cleaning up banks’ balance sheets and encouraging them to lend more. The banks which sign up must bear around 10 per cent of initial losses and agree to increase lending, and the government will guarantee the remaining 90 per cent of the debt. The Royal Bank of Scotland was the first bank to sign up to the scheme – putting in £325 billion of toxic assets – and immediately revealed that it was getting a further £25 billion bail-out from the government, having just confirmed a loss of £24.1 billion last year.