LONDON - BRITAIN announced plans on Tuesday to break up state-rescued banks RBS and LBG to address EU competition concerns, and pump about 30 billion pounds (S$68.5 billion) into the pair.

'To promote greater competition in UK banking, and meet EU state aid rules, the banks will... be required to make divestments of significant parts of their businesses over the next four years,' the Treasury said in a statement.

Under the plans, the British government will pump another 25.5 billion pounds into Royal Bank of Scotland (RBS), which will also place 282 billion pounds of high-risk debts into the government's toxic asset insurance scheme, as well as sell its branches in England and Wales, and NatWest branches in Scotland.

The developments will see the government's economic interest in RBS climb to 84 per cent and its voting rights rise to 75 per cent.

Lloyds Banking Group, meanwhile, unveiled plans to raise at least 21 billion pounds of new funds and pay a 2.5 billion pound fee for avoiding the state toxic asset plan, with the government retaining a 43-per cent stake in Lloyds.

LBG added that it would offload its Lloyds branches in Scotland, its Cheltenham & Gloucester branches, and the Intelligent Finance online business. -- AFP