Will RBS sell Coutts?

 
The RBS office in the City of London. Sir Mervyn King has suggested splitting RBS in two.

Mervyn King's remarks that he wants to see RBS's poisonous and low quality assets hived off into a new so-called bad bank matter - but probably not in the way that seems most obvious.

Because that's not going to happen. My sources at the Treasury tell me that they are happy with RBS's current proposals to mend itself, which involve shrinking its investment bank and floating a share of its US retail bank, Citizens, on the stock market.

However within a matter of days, Sir Mervyn and his colleagues on the Bank of England's Financial Policy Committee, or FPC, will determine how much additional capital all Britain's banks have to find, to protect themselves against future losses on loans to business and to personal customers who are only just keeping their heads above water (and see one I prepared earlier).

What the governor signalled is his concern that RBS remains too weak to provide the credit needed for economic recovery. So it seems highly plausible that he will instruct RBS to raise more capital than it is currently planning to do.

Since George Osborne has set up the FPC with independent authority to minimise the risks in the financial system, he would not find it easy to over-rule or ignore it on the first occasion it makes a big decision.

The words "back" and "rod" are probably on Mr Osborne's mind a good deal, in these Sir Mervyn's last weeks in the job.

That said, the idea that taxpayers will end up putting more money into RBS is for the birds. Such would be a short cut to political ruin for Mr Osborne, since Tory MPs would not tolerate even an extra penny of our money going into RBS.

The far more plausible alternative is that RBS will end up having to sell even more assets than it currently plans, including - perhaps - the Queen's bank, Coutts.

 
Robert Peston, economics editor Article written by Robert Peston Robert Peston Economics editor

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  • rate this
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    Comment number 95.

    @81. rememberdurruti - what has been stolen? Do you mean cuts in benefits? Aha - the "bedroom tax" perhaps, which is not actually a tax as you don't pay tax on money you don't earn (catchy name, though).

    @88.Stevie - RBS made £3.5bn operating profit. Why not pay bonuses? And don't forget bonuses include staff you really ought not to have a gripe against - counter staff, mortgage advisors, etc.

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    Comment number 94.

    Those on here commenting about the continuing drain of losses by RBS - I think many of you need to understand the figures more. £3bn+ operating profits. £4.5bn of the loss was down to an accounting rule where liabilities go up when the creditworthiness of a bank improves. Yes, still losses coming through on LIBOR and PPI but basic, day to day banking - £3bn+ profit. That's good.

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    Comment number 93.

    But doesn't Coutts have a toxic number of VERY wealthy clients suing them over a reccomendation to invest with the Madoff gang?

  • Comment number 92.

    All this user's posts have been removed.Why?

  • rate this
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    Comment number 91.

    Royal Bank of Canada will buy some overseas divisions of Coutts from RBS, giving RBC access to high-net-worth individuals (That may be you, but it's not me!). Coutts clients have included the Queen + sports & pop stars. In Nov. 2011, Britain’s financial watchdog fined Coutts £6.3-million for failings related to sale of FUND PRODUCT. Personally, I dislike this RBC investment. It bears watching.

 

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