Full-scale RBS split into ‘good and bad bank’ to be rejected

Long-delayed Treasury report set to be released after the Tory conference

The Treasury is set to unveil its verdict on a break-up of Royal Bank of Scotland shortly after the Tory Party conference, The Independent on Sunday can reveal.

A Government-commissioned report is expected to reject a full-scale split into a good and bad bank, but could recommend hiving off RBS’s troubled Irish business in a bid to appease senior members of the Parliamentary Commission on Banking Standards. They favour a break-up of RBS, which is majority-owned by the state.

The findings were expected earlier this month, but their report has been delayed as a result of the “size of the undertaking”, sources said.

It is understood the report, being overseen by Rothschild, could be published shortly after the party’s conference, which kicks off next Sunday.

The bank has close links to the Government and employed John Kingman as global co-head of the financial institutions for two years before his return to the Treasury last year.

Mr Kingman oversaw the bailout of the banks during the financial crisis and also led UKFI, the body set up to oversee the state’s holding in the banks.

There have been concerns expressed in some quarters that the review will simply report that a break-up is not in the Government or the bank’s interests as it gears up towards returning to private hands. Any major break-up would inevitably delay this, and probably rule out a target of starting the process late next year.

Andrew Tyrie, chairman of the Commission, last month fired a shot across the Treasury’s bows by publishing an open letter urging that all options for the state-backed lender’s future should be “examined as a matter of urgency”.

Members of the Commission, notably Lord Lawson, have argued that a split into a good and a bad bank would lead to a stronger RBS that would be in a better position to support the UK economy through lending.

RBS is opposed to the move, however, with senior figures at the bank believing that most of the hard work aimed at dealing with the legacy of disgraced former boss Fred Goodwin is done.

RBS last week sold off another 20 per cent of Direct Line, the insurer, which raised £630m. It has also promoted Ross McEwan to take over from Stephen Hester as chief executive.

Last week the Government began the privatisation of Lloyds Banking Group, selling off 6 per cent for £3.2bn.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate