Royal Bank of Scotland fears EU ruling on state aid
As we covered in one of our recent posts, the European Union is looking at state aid given to the Royal Bank of Scotland and Lloyds bank by the UK government. While it seems almost certain that both companies will be asked to reduce their market share in the UK by around 20%, the Royal Bank of Scotland fears that the EU may use the UK issue as a yardstick and a warning for others.
There are real concerns that Royal Bank of Scotland will be ordered to sell off a number of businesses in the short to medium term, which will not only reduce the company's profitability and exposure in UK, but leave it open opportunism from potential buyers who know the company is a forced seller. Under these circumstances it would be very difficult to obtain a "true market price" for any assets which came under the hammer, something which is concerning the Royal Bank of Scotland management more and more.
It is very likely to be the same for Lloyds bank which is in a very similar situation to Royal Bank of Scotland although we are yet to receive confirmation from the EU.
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