UK's Bailed-out Banks Forced Into Overhaul

ROBERT BARR

LONDON (AP) — News that Britain's bailed-out banks may have to sell more of their businesses in return for being rescued jangled market nerves Monday, with Royal Bank of Scotland, Lloyds Banking Group and the wider financial sector facing a crucial week in the road to recovery.

Royal Bank of Scotland Plc announced Monday that it will cut 3,700 jobs in its British branch network over the next two years. Earlier in the day, it had said that EU regulators were demanding it sell significant parts of its business, more than it had expected. The move was supported by the British government, which on Sunday called for a thorough shake up of the sector.

The news caused shares in RBS, which is 70 percent owned by the government, to fall 7.8 percent to their lowest level in more than three months. RBS said it would disclose details of the asset sales by Friday morning, when it reports third-quarter results.

Lloyds, which is itself 43 percent owned by taxpayers, is expected to announce fundraising plans on Tuesday aimed at keeping the government from acquiring a larger stake. It may also update the market on its disposal plans. Shares closed down 2.33 percent.