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November 3, 2009

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Royal Bank of Scotland hits EC hurdle

ROYAL Bank of Scotland Group Plc said yesterday that the European Commission required more sales of assets before approving the bailout which made the government a majority owner.

The bank said talks between the British Treasury and the EC, the executive arm of the European Union, were "in their final stages, and will include some divestments not initially contemplated." The bank gave no details about what parts of its business it might be forced to sell.

It was already expected to sell branches in England under the revived Williams & Glyn's name.

"It remains RBS's goal that any required divestments do not threaten its recovery plan which is already under way," the company said.

RBS said it was also close to agreement with the Treasury about terms for insuring 325 billion pounds (US$530 billion) of troubled assets, a step which will increase the government's stake in the bank from 70 percent to more than 80 percent.

Media reports say RBS may have to sell its Churchill and Direct Line insurance operations, a large part of its investment bank, and its United States banking arm, Citizens Financial Group. The Rhode Island-based business employs about 24,000 people.

Reports also suggest that Lloyds Banking Group could shed its mortgage arm, Cheltenham & Gloucester, and Intelligent Finance, an Internet bank.

"What you really want to do is have quite a substantial divestment - perhaps branches or perhaps particular institutions that they own - made available to other people," British Foreign Minister Alistair Darling told the BBC's "The Politics Show."


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