RBS posts record loss, splits assets

Royal Bank of Scotland Group Plc will put 325 billion pounds ($462 billion) of investments into a state insurance program and shift toxic assets to a new unit after posting the biggest loss in British history.

Edinburgh-based RBS, the largest bank controlled by the UK government, plans to transfer 540 billion pounds of assets, including derivatives and mortgage-backed securities, to the new division, mirroring the so-called bad bank created by Citigroup Inc last month.

RBS and Lloyds Banking Group Plc rose more than 25 percent in London trading as the government provided a bigger guarantee than analysts had estimated. Prime Minister Gordon Brown's government agreed to insure the distressed assets of British banks to boost capital, spur lending and jumpstart the economy, which shrank 1.5 percent in the fourth quarter.