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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2010/12/asset-protection-fees-set-too-low.jpg"><img class="alignnone size-full" title="The Government could have fixed a higher minimum charge for RBS to use its Asset Protection Scheme, National Audit Office said" src="http://londonglossy.com/wp-content/uploads/2010/12/min-asset-protection-fees-set-too-low.jpg" alt="The Government could have fixed a higher minimum charge for RBS to use its Asset Protection Scheme, National Audit Office said"/></a></p>
<p>The Government did not set fees high enough for the giant toxic asset insurance scheme for bailed-out banks, according to a watchdog.</p>
<p>The National Audit Office (NAO) said the Treasury under former chancellor Alistair Darling could have fixed a higher minimum charge for Royal Bank of Scotland to use its Asset Protection Scheme (APS), while Lloyds Banking Group could also have paid more when it decided to pull out earlier this year.</p>
<p>The APS was further criticised for not doing more to encourage lending, with Lloyds and RBS falling a long way short of business loan targets in the scheme&#8217;s first year.</p>
<p>The report on the scheme found the Treasury did not put enough analysis into the potential fees arranged for RBS to use the APS &#8211; designed to restore confidence in the financial market following the 2008 financial crisis.</p>
<p>RBS faces a minimum charge of £2.5 billion, but the NAO believes this could have been set at up to £4.4 billion.</p>
<p>The bank agreed final details of the scheme last November to insure £282 billion of assets. The Government injected £25.5 billion of new capital into the bank, raising its stake to 84%, which has since fallen to 83%.</p>
<p>Lloyds, which is 41% owned by the taxpayer, paid £2.5 billion in exit fees when it opted to raise funds through an investor cash-call instead of using the APS.</p>
<p>It could have been forced to pay between £3 billion and £4.5 billion based on typical rate of return calculations, according to the NAO, although it noted fees at this level would have jeopardised Lloyds from exiting the scheme.</p>
<p>The NAO&#8217;s study concluded overall that the APS achieved the primary goal of maintaining financial stability &#8211; coming at a time of plummeting market confidence in banks following the collapse of Lehman Brothers.</p>
<p>The audit office was disappointed at the £30 billion shortfall notched up by Lloyds and RBS in meeting business lending targets in the year to March.</p>
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