As part of the British government’s Asset Protection Scheme (APS) more than £167bn of Royal Bank of Scotland’s (RBS) risky assets outside Britain are being insured.
It is understood that €20bn of the total £282bn of assets covered by the APS are based in Ireland.
RBS put £75.4bn of European Union assets, £43.6bn of US assets and £48.4bn from other countries into the programme, the British Treasury said. The remaining £114.5bn pounds of insured assets are from Britain.
RBS is taking part in the APS to avoid nationalisation after receiving £45.5bn of taxpayers’ funds since October last year. The bank posted the biggest loss in British corporate history last year after its acquisition of ABN Amro Holding.
In Ireland the bank has a vast portfolio of loans to Irish and Northern Irish businesses and customers, including £2.9bn worth of negative equity mortgages throughout Ireland.
RBS, which owns Ulster Bank, has already injected close to €2bn into the Irish bank this year.
A spokeswoman for Ulster Bank said yesterday that it is still reviewing any possible application to join NAMA. The Government has said foreign banks can apply to join NAMA.
At the peak of the banking crisis, RBS had become the world’s biggest bank in terms of assets.
The British Treasury said that its central expectation is that overall net losses on the insured pool will not exceed the £60bn, which will be borne by RBS meaning the direct cost to the taxpayer from the APS is expected to be nil.
Under the agreement, RBS will manage the assets in the scheme but hand control to a “step-in manager” appointed by the Treasury if losses reach £75bn.
The British government did not reveal whether any loans to Dubai, to which RBS is believed to have the greatest exposure of any British bank, are included in the APS.
RBS shareholders will vote next week on the bank’s participation in the APS. The plan, in principle agreed on in February to ring-fence assets that were turning sour amid the global recession, originally covered £325bn of assets.