RBS: A step to privatisation, but just a step

As expected, RBS is withdrawing from the 'Asset Protection Scheme' - a giant government insurance scheme that was set up when the credit bubble burst, as a guarantee that RBS didn't totally and utterly collapse.

RBS branch in central London Credit: Press Association

As the bank moves along its slow and painful journey back to health it is now in good enough shape to be able to do without this backstop, and tomorrow they will officially withdraw from the APS.

This move tells us two things that might seem to contradict each other at first.

It is a reminder of how far RBS has come, just how much unwinding they have done. The bank's released figures this morning that show they have shed around 700 billion of 'group funded assets' and 186 billion 'non core assets' from their balance sheet which was, at the time of the crisis, a whopping 1.6 trillion pounds.

Headquarters of the Royal Bank of Scotland in the City of London Credit: Press Association

Essentially this means when the credit bubble burst, RBS had loans or other assets on its books, some of them dodgy, worth nearly three times the total amount our government spends every year. Staggering. In the last few years they have got rid of nearly a trillion of it. That in itself is a massive change.

But it is also a reminder of how much stress RBS was under and how far it still has to go.

Just this morning, one of the City's top regulators is suggesting the bank needs to sell its American operation and shrink its investment bank even further. After the deal to sell more than three hundred branches to Santander fell through at the end of last week the bank's strategy is under pressure.

And for all the banks, as new rules are argued over and written they're far from a tempting buy for most investors.

RBS has taken very big steps to sort itself out and the exit from the APS is confirmation of that, but it is still a business under pressure, don't expect to give up your taxpayer share soon.