London  - The British government Thursday defended its renewed large-scale intervention to secure the survival of the Royal Bank of Scotland (RBS) which has announced record losses of 24.1 billion pounds (34.7 billion dollars).

Alistair Darling, the Chancellor of the Exchequer, said by offering a massive asset insurance scheme of 325 billion pounds to RBS, the government "recognized the fact that banks need to clean up their balance sheets."

The move will enable RBS to separate "toxic" parts of its business from "healthy" core operations with a view to disposing of troubled sections of its business at a later date.

"The costs are colossal, but the costs of not doing it are also colossal," said Darling, citing the failure of US investment bank Lehman Brothers as an example of the consequences of bank collapse.

He conceded in a BBC interview that the rescue plan for RBS came "close to full nationalization," but stressed that the British government believed the "insurance model" to be preferable.

RBS is expected to pay a fee totalling 6.5 billion pounds for use of the asset insurance scheme. The government currently owns nearly 70 per cent in RBS, a share that could rise to 80 per cent with the new measures announced Thursday. (dpa)