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UK taxpayers to make profit from asset protection scheme

The Asset Protection Agency, the agency in charge of the UK government's asset protection scheme, is confident that UK taxpayers could walk away with a profit from the scheme of anywhere between £5 billion and £6 billion. This is the scheme utilise by Lloyds bank and Royal Bank of Scotland which effectively insures their toxic assets and "puts a lid" on any potential liabilities in the future. In many ways the two banks were forced to become involved in the scheme even though their initial cover was reduced as the banking arena and the UK economy improved at the time.

The Asset Protection Agency believes that total lifetime losses will not exceed £57 billion which is £3 billion below the threshold after which the UK government would be forced to cover 90% of losses. If there is no major economic downturn in the foreseeable future there is every chance that UK taxpayers could actually walk away with a profit from the scheme as well as potentially saving the futures of Royal Bank of Scotland and Lloyds bank.

Whether investors will receive such a return from their direct investment into Lloyds bank and Royal Bank of Scotland remains to be seen because the future of the UK banking sector is very difficult to predict.

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