Royal Bank of Scotland chief executive Stephen Hester has rejected calls to split the firm into a good and bad bank.
In March, Bank of England governor Mervyn King said the Government should separate the toxic assets out of RBS to speed up its recovery.
King is backed by former chancellor Lord Nigel Lawson, while the parliamentary commission on banking standards’ final report is due out next month and may call for the break-up of RBS.
But the today FT reports Hester has rejected the suggestion, claiming it would be costly and time-consuming with no clear objective.
In the same interview, Hester said the Government has been very good at “treading the balance” between politics and interfering in the running of the bank.
Osborne has previously interfered dramatically by calling for Libor fines to be paid from bankers’ bonuses and saying he wants to see RBS shrunk dramatically.
Hester also vowed to stay on to oversee the bank’s return to the private sector and wants to oversee a transition from “bust bank, to normal bank, to really good bank”.
He took over from Fred Goodwin at RBS in 2008 with a brief to rebuild the bank after it needed a Government bailout to survive.
Hester said: “If I am wanted [to lead the privatisation], why wouldn’t I want to do that?”