Nov. 3 (Bloomberg) -- Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc will receive 31.3 billion pounds ($51 billion) in a second bailout from the U.K. taxpayer as the two banks agreed to cap bonuses.

The Treasury will inject 25.5 billion pounds of capital into RBS, for a total of 45.5 billion pounds, making it the costliest bailout of any bank worldwide. The government will fund about a quarter of Lloyds’s 21 billion-pound fundraising. Both banks said they won’t pay cash bonuses to workers earning more than 39,000 pounds this year.

The rescue will bring the U.K. closer to full ownership of RBS, while Lloyds will escape government control. Lloyds Chief Executive Officer Eric Daniels will raise funds from money managers to avoid the Treasury’s asset insurance plan, which would give the government a majority stake. He’s betting bad loans will drop after the Bank of England said the country’s recession was nearly over. Stephen Hester, RBS’s CEO, will by contrast accept more government oversight and insure 282 billion pounds of his banks’ riskiest assets with the Treasury.

“There is now a very fine line between RBS being nationalized and the stake the government now holds,” said Danny Gabay, director of Fathom Consulting in London and a former Bank of England economist. “This contrasts with Lloyds’s willingness to fight harder for its independence.”

European Union

RBS fell 7 percent to 35.93 pence in London trading, for a market value of 20.3 billion pounds. Lloyds rose 2.7 percent to 87.33 pence.

Both banks will sell branches and divisions to comply with state aid rules. The European Union is forcing banks that received government help to sell assets to stop them having an unfair advantage and boost competition. Last month, it forced ING Groep NV, the biggest Dutch financial services company, to sell its insurance units to win approval for a bailout. By contrast, U.S. regulators have provided financial assistance to banks that expanded during the crisis through acquisitions.

“There is a very obvious contrast with the American banks,” Gabay said. “That is symptomatic that the U.S economy is healing, whereas the British economy is still stuck in recession.”

Directors of both banks will defer their 2009 bonus payments until 2012, the Treasury said today.

“We don’t want to demonize people in banking,” City Minister Paul Myners said in an interview with BBC television today, adding that most people in banking are not highly paid. “But at the top of banking, we’re going to bear down on remuneration.”

Earlier Bailout

Today’s bailout for RBS and Lloyds follows the 37 billion pounds the two lenders received last year and will bring the government’s stake in RBS to more than 84 percent from 70 percent. Barclays Plc, the U.K.’s second-biggest bank, and HSBC Holdings Plc, Europe’s largest, haven’t taken state aid.

“From an investors’ point of view RBS and Lloyds are still unattractive because the government’s stake is so high,” said Richard Hunter, London-based head of U.K. equities at Hargreaves Lansdown Stockbrokers. “This is a vindication of Barclays and HSBC decision to do everything possible to remain outside the shackles of government intervention.”

Lloyds, the U.K.’s biggest mortgage lender, plans to raise 13.5 billion pounds in the U.K.’s biggest rights offering, and 7.5 billion pounds in a bond exchange, the London-based bank said. The U.K. will keep its stake in Lloyds at 43 percent by taking up its rights to buy 5.8 billion pounds of stock in the sale. The fundraising will boost Lloyds core Tier 1 capital ratio to 8.6 percent from 6.3 percent.

‘B Shares’

The government will buy 25.5 billion pounds of “B” shares in RBS to strengthen the lender’s capital, the bank said in a statement today. The government may buy a further 8 billion pounds of the shares if RBS’s core Tier 1 capital ratio falls below 5 percent. The bank said it doesn’t expect to require the extra 8 billion pounds.

Under RBS’s revised terms of the asset protection plan, the bank will be responsible for the first 60 billion pounds of losses on the risky loans it puts into the program, compared with the 42.2 billion pounds initially agreed. It will be able to exit the program at any time in return for a 2.5 billion-pound payment, as long as the first loss hasn’t been exceeded.

Lloyds will cut 600 branches, reduce the bank’s mortgage assets by 19 percent and its share of current accounts by 4.6 percent. The bank will also sell Cheltenham & Gloucester- branded accounts and mortgages, its Intelligent Finance online unit, some Lloyds TSB branches and the TSB brand within four years, the bank said.

Branch Sales

RBS will sell 318 U.K. branches, including its RBS outlets in England and Wales as well as its NatWest branches in Scotland. The bank will also divest the Global Merchant Services unit and shed its stake in its Sempra commodities trading division. RBS said it may also hold an initial public offering of its insurance divisions.

The units generated 5.75 billion pounds of revenue last year, RBS said today. That’s about 21 percent of 2008’s total, according to RBS’s preliminary results reported in February.

CEO Stephen Hester is unwinding acquisitions made by his predecessor Fred Goodwin who helped lead RBS during $140 billion of takeovers, swelling the balance to 2.2 trillion pounds, exceeding Britain’s annual economic output.

“It all smells to me a bit of politics and the start of election campaigning,” said Lothar Mentel, chief investment officer at Octopus Investments Ltd., which oversees $2 billion, including a stake in Lloyds. “The government wants to be seen as punishing the banks, whereas addressing the underlying problems of credit derivatives is a lot more complicated and less headline grabbing.”

To contact the reporters on this story: Jon Menon in London at jmenon1@bloomberg.net Andrew MacAskill in London at amacaskill@bloomberg.net

Last Updated: November 3, 2009 11:45 EST