RBS - Will this affect Ulster Bank?

The APS is an insurance scheme designed to help banks with lots of bad loans. These have tumbled in value, making banks reluctant to engage in further lending because their capital base is under threat. Once the government insures banks against further losses, the argument goes, they can get back to lending to firms and households to help the economy get back on its feet again.

How does it work?

Banks need to agree with the Treasury how many assets and what type of assets they can insure. The original idea was that the Treasury would cover 90% of banks' losses. The Treasury charges a fee for the insurance it is providing.

Click to expand...