The coalition government will be subjected to criticism for not levying an adequate fee on Lloyds and the Royal bank of Scotland (RBS) for providing insurance for their bad loans in a report to be released this week by the National Audit Office, reports the Times.
The scheme was created in 2009 to provide immunity to banks against potential losses on their bad assets. Llyods opted out of the deal following a long period of negotiation, choosing instead to raise capital from investors.
RBS on the other hand insured £282bn worth of assets under the plan and received a £25.5bn cash injection from the government.
The £2.5bn fee for the asset protection scheme (APS) became an issue of contention with Llyods arguing that it need only pay a sum of £500m as it did not enter the scheme in the end. RBS entered into a deal with the Treasury to pay £500m annually for five years with an exit option should the bank opt out of the scheme.
The report also contains details of the millions of pounds of expenditure incurred on lawyers from Slaughter and May and investment bankers from Citigroup and Credit Suisse who advised on the plan.