Part-nationalised banks to be broken up
RBS is set to sell 318 branches
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Royal Bank of Scotland (RBS) and Lloyds Banking Group are set to sell off hundreds of bank branches in response to demands by the European Union to introduce more competition in the banking sector.
The part-nationalised banks have been told to sell off parts of their business in response to pressure from Brussels after receiving vast amounts of tax-payers money at the height of the credit crunch.
The government hopes the sales will create greater competition on the high street as the economy continues to make a slow and uncertain recovery.
RBS is set to sell some 318 branches, with Lloyds expected to lose over 600 over the next four years.
The latter has also decided to opt-out of the government's insurance scheme, instead choosing to raise £21 billion with a £13.5 billion rights issue and a £7.5 billion debt swap.
Lloyds will also make a £2.5 billion payment to the government for the protection it has already received under the Asset Protection Scheme (APS).
The government's interest in Lloyds will now be capped at 43 per cent, while the taxpayer's stake will now rise to 84 per cent of RBS, although the Treasury said its ordinary shareholding will not exceed 75 per cent.
RBS and Lloyds have also agreed to clamp down on bonuses in response to receiving £30 billion from the government today.
Both banks have said their board members have agreed to defer bonuses for three years, while no-one earning over £39,000 will receive a bonus.