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Royal Bank of Scotland prevented from repaying debt

Royal Bank of Scotland has today been advised by the Financial Services Authority (FSA) that a bid to repay nearly £1 billion of debt to investors, in the shape of bond redemptions, cannot go ahead as it could possibly jeopardise the state aid which the company has recently received. Despite the fact that billions of pounds have already been invested into Royal Bank of Scotland and Lloyds bank by the UK government, these deals still need to be ratified by the EU authorities and any repayment of debt could well put the seal of approval at risk.

There is growing concern that the European officials are looking to place their own stamp on the UK government bailout and could potentially insist on various conditions being met. This issue has been ongoing for some time and, despite early noises that it would be pushed through fairly quickly, there appear to be a number of stumbling blocks. Once the deals have been ratified, even if there are various conditions attached, this will allow Royal Bank of Scotland and Lloyds bank to look ahead to the future.

Quite what the future holds for these two banks is very much open to debate at this moment in time.

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