Royal Bank of Scotland reported the biggest loss in British history on Thursday and said the governments stake could rise as high as 95 per cent after it stumped up billions to insure the banks risky assets.
RBS also unveiled plans to cut £2.5 billion ($3.56 billion) in costs as part of a restructuring plan which will see it exit or reduce its presence in 36 of the 54 countries it operates,which could see 20,000 job cuts.
The key building blocks for RBSs recovery are now in place, RBS chief executive Stephen Hester said.
That doesnt mean we will recover successfully,theres a massive amount of hard work to do and obstacles to overcome,but we now have the job of execution.
Hester said the governments asset insurance scheme would give the bank the stability to carry out its restructuring plan. RBS is placing £325 billion of its assets in the government-funded scheme,gaining partial protection against future losses they incur.
RBS will be responsible for the first £19.5 billion of any loss,and the bank said it was raising a further £13 billion from the government in exchange for non-voting B shares to cover its obligation.
RBS shares were up 29 per cent at 29.8 pence by 0955 GMT,while the FTSE 100 share index was 1.6 per cent higher.