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.