UK taxpayer to earn £5bn from insuring toxic assets, report claims

26 July 2010

The UK taxpayer could earn as much as a £5 billion profit from a scheme set up by government to insure toxic assets belonging to banks, a new survey has revealed.

In its report, the Asset Protection Agency (APA), revealed that its scheme has already yielded £2.5 billion for managing risky assets belonging to the Lloyds Banking Group.

A further £2.5 billion is expected to be earned by maintaining loans belonging to the Royal Bank of Scotland (RBS).

As of March 31st 2010, APA covered £230.9 billion worth of assets belonging to RBS, .

Stephan Wilcke, head of the Asset Protection Agency, who was quoted by Reuters, said: “I've previously said I was hoping the taxpayer would end up with a profit. I'm now saying I'm confident the taxpayer will end up with a profit, with a 90 per cent chance of success.”

The organisation predicted that RBS will lose £57 billion on the loans, a figure under the £60 billion maximum which the bank has agreed to absorb in event of its assets losing value.

RBS can leave the APA’s scheme at any stage but would be required to pay £2.5 billion worth of fees as well as returning any donated funds as part of the agreement.

By Jim Ottewill

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