Exiting the Asset Protection Scheme would be a milestone in RBS's recovery just under four years after it was rescued.

The taxpayer-backed Royal Bank of Scotland (RBS) is trying to extricate itself from a giant insurance scheme before it is forced to pay tens of millions of pounds more for cover it has publicly labelled "worthless". I have learned that RBS hopes to secure approval from the Financial Services Authority (FSA) and the Treasury in the next few days to exit the Asset Protection Scheme (APS), which was set up during the turbulence of the banking crisis more than three years ago. The scheme was intended to provide insurance against losses on more than £280bn of toxic assets on RBS’s balance sheet, with the bank paying for losses of up to £60bn. Stress tests conducted by the City regulator earlier this year suggested that RBS would only make a claim under the APS if economic conditions deteriorated to resemble those of the Great Depression.

RBS has now sold or run off the majority of the assets originally insured by the APS. With the bank now having paid the minimum £2.5bn fee to the Treasury that was agreed when the APS was set up, the scheme no longer provides any economic value to the bank. RBS's existing premium expires on September 30, after which it should – under the terms of its agreement with the Treasury – pay the next quarterly instalment of a rolling £500m annual fee....Read more here: Exclusive: RBS Heads For Insurance Exit