RBS could be nationalised under commission’s plans
Reports suggest that banking standards commission wants Royal Bank of Scotland broken up into a good and bad bank, a blow for George Osborne’s plans for a pre-election sell-off.
George Osborne could have his hopes a rapid privatisation of Royal Bank of Scotland scuppered by the parliamentary commission on banking standards, which is said to preparing to recommend the bailed-out bank be nationalised and split into a good and bad bank.
An early draft of the commission’s work – which began last September following the Libor crisis – is circling ahead of a formal meeting of the commission members to ratify the report next week. According to the BBC’s Robert Peston, the commission wants RBS broken up into a good and bad bank, a move which the chancellor has told the commissioners during his evidence would cost £10bn.
Osborne is thought to be hoping the commission’s report will be published before his Mansion House speech to the City on 19 June where he wants to outline a strategy for returning the 81% taxpayer owned RBS to the private sector and the 39% stake in Lloyds Banking Group.
It was not immediately clear how precisely the draft spelt out a split up of RBS, but even the most subtle of references will present Osborne with a dilemma as he attempts to a pre-election sale of the bank.
Lord Lawson, a member of the commission, has made it clear that splitting the bank is his preferred option for RBS.
The Treasury has already been asked by the select committee – also chaired by the Conservative MP Andrew Tyrie who chairs the banking commission – for a report on the cost of breaking up RBS. When outgoing governor of the Bank of England Sir Mervyn King appeared before the commission he also said he thought RBS’s troubled assets needeed to be hived off.
The Treasury is yet to reply to that request and Osborne has said he is working on a strategy after the intervention by the International Monetary Fund in May calling on him to devise a “clear strategy” for the two bailed out banks.
Last month, he said: “Having refocused their business, now is the time for clear strategy in how to return RBS and Lloyds to the private sector in a way that protects value for the taxpayer”.
According to the BBC one idea being explored by the Treasury is to transfer RBS’s Ulster Bank to the Irish government via Ireland’s National Asset Management Agency.
The banking commission declined to comment.