Royal Bank of Scotland Group plc (RBS) and Lloyds Banking Group have agreed to the UK Government’s terms in relation to the Asset Protection Scheme (APS) that was announced on November 3, 2009. talks have now concluded between the two banks and the Government, and as a result of improved market conditions and following extensive due diligence announced in February, the Government agreed that Lloyds will not take part in the APS and instead will raise additional private sector capital £21 billion and pay a fee to the taxpayer for the implicit protection provided to date. RBS, however, will take part in the APS under revised terms that improve incentives and deliver better risk-sharing with the private sector. To support greater competition in UK banking, and meet EU State Aid rules, the banks will also be required to make divestments of major parts of their businesses over the next four years. RBS will sell 318 branches in England and Wales and will also sell its National Westminster Bank plc brand in Scotland, RBS Insurance Group Limited and Global Merchant Services. It will also sell its stake in RBS Sempra Commodities LLP. Lloyds will sell off more than 600 branches over the next four years; this will includes Lloyds TSB Bank plc in England, Wales and Scotland and Cheltenham & Gloucester Plc, as well as Intelligent Finance online business. Lloyds said the businesses that it will have to sell off account for about £30 billion of customer deposits and £70 billion of lending, generating income of £1.4 billion in the year to December 2008.

National Westminster Bank plc announced audited consolidated earnings results for the first half ended June 30, 2009. For the period, the company reported profit before tax of £241 million compared with £1,448 million in the first half of 2008. The results have been adversely affected by a significant increase in impairment losses, reflecting the continuing deterioration in economic conditions. Total income was up 3% to £4,492 million, benefiting from favourable trading conditions. Net interest income decreased by 39% to £1,605 million reflecting the very low interest rate environment prevailing in all the Group's major markets where deposit pricing floors and active competition have compressed liability margins. Total comprehensive loss attributable to ordinary shareholders was £358 million compared to profit of £1,234 million for the same period a year ago. Profit attributable to ordinary shareholders was £201 million compared to £1,015 million for the same period a year ago. Net cash provided by operating activities before tax was £46,706 million compared to net cash used in operating activities before tax of £14,389 million for the same period a year ago. Net cash provided by operating activities was £46,454 million compared to net cash used in operating activities of £14,673 million for the same period a year ago. The Directors have declared the specified dividend on the undernoted Series of non-cumulative dollar preference shares of $25.00 each for the three months to 16 October 2009. The dividend will be paid on 16 October 2009 at the undernoted rate to holders on the register at the close of business on 4 September 2009. Dividend on Series C per share was $0.48519. The Directors also declared the specified dividend on the undernoted Series of non-cumulative sterling preference shares of £1.00 each for the six months to 16 October 2009. The dividend will be paid on 16 October 2009 at the undernoted rate to holders on the register at the close of business on 4 September 2009. The dividend on Series A Share was £0.045.

O2 (UK) Limited, in partnership with National Westminster Bank plc, will be 'a launch-pad' into other banking services for mobile operator. O2 is planning to enter the financial services market under the brand O2 Money. O2 Money is partnering with Natwest and will launch two fee-free, pre-paid Visa cards in August. They will be offered to O2 customers, who will receive free texts after every transaction informing them of their balance. The Cash Manager card is aimed at adults who want to keep an eye on what they spend. Load & Go is aimed at younger people, and teenagers from the age of 13 will be able to register for the card. Parents will be informed of the application and transactions on certain websites such gambling will be banned. Online tools are also being developed that will allow card users to analyse their spending.