Reuters reports that it has cost the UK £26million to set up its scheme to insure the risky assets of two government controlled banks, that may never be used.
The money has been paid out to banks, lawyers and other advisers for their input into the government’s Asset Protection Scheme (APS) which was first agreed in principle six months ago with participating banks, Royal Bank of Scotland (RBS) and Lloyds pledging their support.
Both RBS and Lloyds planned to insure around £585 billion of their risky assets through the APS, although terms of the complex scheme are yet to be finalised. Lloyds have since reported that they may limit their involvement in the scheme or attempt to raise funds privately, which could lead to more egg on the face of the government, who appear to have little control over their charges.
Without being specific the Treasury have said that part of the fees releating to APS would be recoverable from the respective banks and that £26million does not represent the net cost to the UK.
Investment banking advice for the whole of 2008 cost the government a mere £7.1million.
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