To ask Her Majesty's Government what assessment they have made of how requiring the Royal Bank of Scotland (RBS) to divest itself of Churchill and Direct Line insurance companies will (a) improve competition in retail banking, and (b) accelerate RBS's repayment of public money. [HMT][HL6332]
The recapitalisation of Royal Bank of Scotland (RBS) and RBS’s participation in the asset protection scheme are both subject to state aid approval from the European Commission. The Treasury has reached an in-principle agreement with Competition Commissioner Neelie Kroes as to the pricing and consequent disposals that RBS must make as a result of receiving state aid, including the disposal of RBS’s insurance business, including brands such as Churchill and Direct Line. RBS has been closely involved throughout the negotiations.
The Government welcome the in-principle agreement and strongly support the EU’s state aid and competition framework. It is vital that institutions that require state aid support do not have unfair commercial advantage over their competitors. The package of disposals is now subject to agreement by the college of Commissioners, which is expected shortly.
The disposal of RBS Insurance along with the other divestment obligations will take place over a four to five-year period. The sale will help strengthen RBS’s balance sheet and enhance long-term viability. The sooner RBS returns to stand-alone commercial viability, the sooner taxpayers will be able to recover their investment.