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

RBS said its participation in the APS would be under better terms, confirming an expected "pay-as-you-go" arrangement that will allow it to pay annually, rather than via a single upfront 6.5 billion pounds, making it easier for the bank to exit it altogether within four years, subject to a fee.

It will now pay 700 million pounds a year for the first three years and 500 million pounds a year thereafter. Under the deal the extent of losses borne by the bank will rise to the first 60 billion pounds from 42 billion pounds previously, making it highly unlikely the bank will dip into the APS fund.

RBS will also get a contingent capital commitment from the government of 8 billion pounds.

In return for state help, banks also agreed not to pay cash bonuses in relation to 2009 performance to staff earning above 39,000 pounds while executive members of both boards agreed to defer all bonuses for this year until 2012.

RBS said the caps would make its task of recruiting and retaining staff even tougher as it overhauls the bank.

The two banks will also be forced to stick to their commitments to lend business and homeowners 39 billion pounds.

On Lloyds, UBS and Merrill Lynch were joint advisers. Morgan Stanley and UBS were joint advisers for RBS. Credit Suisse and Deutsche Bank advised the Treasury.

For a graph, see: http://graphics.thomsonreuters.com/119/UK_BNKS1109.gif

(Additional reporting by Paul Hoskins, Myles Neligan, Raji Menon; Editing by Greg Mahlich)