The Royal Bank of Scotland (RBS) is attempting to wind down the remainder of around £1bn in controversial LOBO bank loans.
Seven local authorities announced in February that they were suing Barclays over a combined £500m of the lender-option, borrower option (LOBO) loans which have come under heavy criticism from campaigners and the shadow chancellor John McDonnell.
Newham LBC followed in the councils’ footsteps and filed a lawsuit against RBS last month, claiming that £150m worth of LOBO loans were fraudulently set with high interest rates when sold prior to the financial crisis.
Now, as reported by the Guardian, RBS is working to wind down its loan portfolio by the end of the year.
The bank is doing this through loan redemptions: allowing local authorities to pay back their loans earlier than their contracts allowed with some also offered a discount on their repayment.
RBS’s LOBO loan portfolio has reportedly been reduced significantly over the last two years and is expected to fully exit its position on the loans by the end of 2019.
Several councils have taken advantage of the early exit offer, including Sheffield, Newcastle, Birmingham and Northamptonshire.