Deal on UK banking shake-up

Britain’s RBS and Lloyds banks have agreed to a massive shake-up of the UK banking sector, which will see both sell hundreds of branches and key businesses. This to appease EU competition concerns over state aid.

The banks are to get the equivalent of a further 36.5 billion euros from the government.

Lloyds will drop out of a government insurance scheme for bad debts by raising 15 billion euros in the world’s largest ever rights issue.

Alistair Darling, the Chancellor of the Exchequer, said: “Both Lloyds and RBS will be in a stronger position to continue lending. Lloyds will increase lending capacity this year and next with an additional 11 billion pounds for businesses and three billion pounds for homebuyers in each year. RBS will continue to meet their lending commitments of 25 billion pounds this year and next, as I indicated earlier this year.”

Meanwhile, Europe’s biggest bank, HSBC, is cutting a further 1,700 jobs in Britain. This adds to the thousands of cuts across the industry over the past year. This week RBS announced plans to axe 3,700 jobs.

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tags: Banking