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Mervyn King calls on Govt to fully nationalise then break up RBS

Mervyn King

Bank of England governor Sir Mervyn King has blasted the Government’s ownership of the Royal Bank of Scotland as a “nonsense” and called for the bank to be fully nationalised and broken up.

Speaking to the Parliamentary Commission on Banking Standards today, King said the Government should buy the remaining 18 per cent of RBS it does not own then split it into a good and bad bank.

He said: “The idea of a bank being 82 per cent owned by the taxpayer, run at arms’ length from the Government, is a nonsense. It cannot make any sense.

“I know it was put there for good reason as people don’t want politicians running banks but it would be much better to accept that it should have been a temporary period of ownership to restructure the bank and put it back. The longer this has gone on the more difficult it has become.”

King said RBS had “acheived nothing” in public ownership and called on chief executive Stephen Hester to be more decisive in restructuring the bank. King says the poor performance of RBS, which lost £5.2bn in 2012, is having a major drag on the UK economy and must be sorted.

He has advised chancellor George Osborne to buy RBS fully and break it up, but says he will not act because of the “presentational problem” that it would add to the deficit.


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. John Constable 6th March 2013 at 1:34 pm

    We find that Generals are usually safely retired before they come out with biting critcisms of their estwhile employer – the Government.

    However, as Mervyn King is now fully into his demob phase, he has obviously decided to ‘say it like it is’ before sloping off back to retirement at Aston Villa.

    George Osborne should bite this particular bullet as suggested by King but one fears that pasties and grannies have killed his courage.

    ‘Chicken George’ must shape up or ship out.

  2. ABOUT TIME – RBS needs to be broken up not just into good and bad bank – but needs to be broken up into about 5 to 6 small Banks and so does the remaining big 4 like Lloyds, Barclays, HSBC and Santander.

    What the market clearly needs is competition and this can only come about by a fundamental reorganisation of our banking sector and Kings knows this.

  3. so if the rbs is broken up into the good and bad bank who gets to foot the bill and what about the losses already incured, seeing as many think the green shoots of recovery are here why not use the rbs to focus on lending for growth , this can increase lending and growth along with the sale price, oor could it be that some people just want a fire sale to make profit at tax payers expense?

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