PART-nationalised Royal Bank of Scotland today said it is to exit a state-backed insurance scheme covering its poorer-quality assets.

The significant move was hailed by Chancellor George Osborne as another step towards returning the 80% state-owned lender to the private sector.

RBS will save £1.4m a day when it exits the Asset Protection Scheme (APS) tomorrow, having paid £2.5b since signing up February 2009.

The Chancellor said: "The Government’s strategy remains to return RBS to the private sector when it is value for the taxpayer to do so. Today is a step in that direction."