EC competition watchdog has term extended
NEGOTIATIONS between the UK’s part state-owned banks and the Treasury over use of the Asset Protection Scheme (APS) look set to be prolonged after EU competition commissioner Neelie Kroes’s term was extended.
Kroes, the European Commission’s competition watchdog, had been set to deliver a ruling on how Lloyds Banking Group and Royal Bank of Scotland should shrink to avoid competition concerns, before stepping down on 31 October.
But Kroes will now continue as caretaker until the end of the year, meaning that negotiations over asset disposals at the two banks – which will inform the Treasury’s stance on whether they can reduce participation in the APS – can be extended.
Kroes has already told Lloyds that it must reduce its share of the current account market in order to receive approval for its use of the APS. But Lloyds and RBS will now both have an extra two months to continue talks with both Kroes and the Treasury.
Lloyds has put together a plan to exit the APS altogether, via a £12.5bn rights issue combined with the issuance of a combination of instruments likely to include preference shares.