Banks get £31 billion more aid, agree sell-offs

RBS, in which the government's stake will rise to 84 percent from 70 percent, said it expected buyer interest for the assets and was considering an initial public offering for RBS Insurance, which it has put on the block before.

Both banks will have up to five years to make the sales.

LLOYDS DEAL

To sidestep the APS, Lloyds confirmed market expectations it would raise 21 billion pounds via a discounted rights issue and by swapping 7.5 billion pounds in existing debt into contingent capital, which will support its capital requirements.

The move will allow Lloyds to avoid the fees associated with the costly APS scheme as the economy improves, and will cap the government's stake at 43 percent. However, Lloyds said it will pay the government a 2.5 billion pound break fee to avoid the APS.

The fully underwritten 13.5 billion-pound cash call, which will involve a massive operation to inform Lloyds's 2.8 million small shareholders, will be priced on Nov 24 at the higher of either 15p or a 38-42 percent discount to the ex-rights price.

Lloyds said it had received backing from shareholders and bond investors, but the response on Tuesday was mixed.

"This deal does not look especially attractive ... They can't pay a dividend until 2012 at least and we still have all the secondary issuance to come," one top ten investor said. "I find myself very underwhelmed."

But another top 10 investor added: "The issue will go through successfully. The deal is done effectively."

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