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Banking commission to recommend RBS break-up

RBS-Building-2012-700x450.jpg

The parliamentary commission on banking standards is set to recommend splitting up the Royal Bank of Scotland into a good and bad bank.

BBC reports suggest a draft final report, given to members last Friday, calls for RBS’ toxic assets to be hived off into a separate bank to leave a profitable arm, in a similar way to Northern Rock in 2008.

Commission members have until next Monday to make amendments and the final report is set for publication in mid to late June.

One commission member has told Money Marketing the paper could change “quite markedly” between final draft and final publication depending on which amendments are taken forward, meaning an RBS break-up may not neccessarily become a final recommendation.

Chancellor George Osborne says he will amend the banking reform bill to implement certain recommendations of the banking commission’s final report.

Outgoing Bank of England governor Sir Mervyn King recommended splitting up RBS in March and is supported by former chancellor Lord Nigel Lawson and Archbishop of Canterbury Justin Welby, who both sit on the commission.

But Osborne and RBS chief executive Stephen Hester have both opposed a break-up, claiming it could cost £10bn and take 18 months to achieve.

Banking consultant Mehrdad Yousefi says: “A decision over creating a good and bad bank should have been made after the bailout in 2008 but five years on is too late.”

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