Break-up plans for RBS, Lloyds unveiled

Britain announced plans on Tuesday to break up state-rescued banks RBS and Lloyds Banking Group (LBG) to address EU competition concerns and to pump about STG30 billion ($A54.36 billion) into the pair.

"To promote greater competition in UK banking and meet EU state aid rules, the banks will ... be required to make divestments of significant parts of their businesses over the next four years," the Treasury said in a statement.

Under the plans, the British government will pump another STG25.5 billion ($A46.21 billion) into Royal Bank of Scotland.

RBS also said it would place STG282 billion ($A511.01 billion) of high-risk debts into the government's toxic asset insurance scheme.

The developments will see the government's economic interest in RBS climb to 84 per cent and its voting rights rise to 75 per cent.

Lloyds Banking Group, meanwhile, unveiled plans to raise at least STG21 billion ($A38.05 billion) of new funds and pay a STG2.5 billion ($A4.53 billion) fee for avoiding the state toxic asset plan.

The government, which said it will participate in the fundraising, will retain a 43 per cent stake in Lloyds.

"Lloyds will not participate in the APS and instead will raise additional private sector capital and pay a fee to the taxpayer for the implicit protection provided to date," the Treasury added.

"This will reduce the risk borne by the taxpayer, improving value for money."

RBS said in a separate statement that it would sell its RBS branches in England and Wales and NatWest branches in Scotland, as well as its Churchill and Direct Line insurance division and parts of its investment banking arm.

Lloyds Banking Group added that it would offload its Lloyds branches in Scotland, its Cheltenham & Gloucester branches, and the Intelligent Finance online business.