BoE governor touts RBS restructure

The outgoing governor of the Bank of England, Sir Mervyn King, said on Wednesday that the British government should consider a radical restructuring of the state-owned Royal Bank of Scotland which it bailed out with £45 billion of taxpayers' money in 2008.

King told a parliamentary committee on banking that RBS, should be split into ‘good’ and ‘bad’ banks before selling the healthy one back to the private sector.

King said: "RBS is worth less than we thought and we should accept that and get back to finding a way to create a new RBS that could be a major lender to the UK economy.

“Time has passed and aside from reducing the balance sheet, nothing has been achieved - we haven't managed to get it into the private sector," noted King.

 "It would be much better to accept that it should have been a temporary period only, and the longer this goes on, the more difficult it becomes," he said.

RBS, last week, posted a net loss of almost £6 billion for 2012.

It was the bank's fifth successive annual loss.

Yet RBS chief executive, Stephen Hester, last week claimed the bank’s restructuring was advanced enough to possibly start the privatisation process next year.

Hester said the bank's return to the private sector was on track and could be completed within two years.

The lender which was rescued at the height of the global financial crisis in 2008 is 82 per cent owned by the British taxpayer.

Categories
Banking
Tags:
Bank of England, Sir Mervyn King, Royal Bank of Scotland
Author:
Elizabeth Fry, Elizabeth.fry@financialpublications.com.au
Article Posted:
March 08, 2013

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