The injection, under a government scheme to ringfence £325bn of RBS's assets against large future losses, is the first of what is expected to be a series of banking bail-outs designed to kick-start lending to the ailing British economy. Lloyds Banking Group, which includes HBOS, is today expected to reveal details of a similar scheme to ringfence up to £250bn of potentially bad assets.
The long-awaited move came as RBS reported a £24.1bn loss for 2008, the largest in British corporate history, and revealed that businesses with assets of bout £240bn – almost a quarter of the bank's balance sheet – would be sold or wound down over the next three to five years.
The losses and insurance scheme are further evidence of the dire state of RBS, which was bailed out by the government last October after suffering heavy losses largely arising from its role in the hostile takeover of ABN Amro, the Dutch lender.