loans

This is a potentially liberating news story for a number of rural authorities – always assuming they have the ability to pay their share of this debt down rapidly. It tells us:

Royal Bank of Scotland is aiming to wind down the remainder of about £1bn in controversial bank loans held by local authorities across the country, after criticisms that high payments have diverted cash from council services.

Campaigners have welcomed the move, which followed similar efforts made by Barclays in 2016 and comes as both lenders face a string of lawsuits.

The loans have been criticised by activists and the shadow chancellor, John McDonnell, who said councils have been on the hook for expensive interest payments that could have been diverted to local services already squeezed by spending cuts. Campaigners against the loans estimate that the cancellation of so-called lender option borrower option loans, or lobo loans, could ultimately save taxpayers £16bn over the next 40 years.

The Guardian understands that RBS is working to wind down the loan portfolio by the end of the year. The main way it is doing this is through loan redemptions: allowing clients including local authorities to pay back the loans earlier than their original contracts allowed, with some offered a discount on their repayment as an additional incentive