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
    0

    Comment number 15.

    I see someone is going round instantly negative rating all comments.

    The level of debate in this country, these days.

    So high brow!

  • rate this
    +5

    Comment number 14.

    "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."

    Well, Robert. he found it easy to ''over-rule and ignore' the Sep 2011 Vickers report, which was five inches thick and made hundreds of key recommendations. Why should this be different?.

  • rate this
    -1

    Comment number 13.

    What about other RBS subsidiaries, eg Lombard? That entity holds significant assets which, yet again, aren't marked properly in terms of the amount of capital set aside for the loans it has made. The problem is there aren't any buyers at a sensible price and RBS continues to try and sell things at par which ain't going to happen - in these severe times people want big discounts!

  • rate this
    0

    Comment number 12.

    The sooner I can store my digital money on my own hard drive (with backups, of course), and get my money paid into/out of my phone, I'll be a happy man. I'll never have to touch a bank again. I suspect I won't be alone, and then all banks will fail, as we will no longer require their services.

  • rate this
    0

    Comment number 11.

    #8
    Well it's certainly no coincidence
    BoE - Banks you need to hold more money
    Banks - We can't get it
    BoE - Here's some money, lend what you can
    Banks - We need to hold it to follow your rules
    BoE - Ok, makes sense, you want anything else?
    Banks - Less regulation, left to get on with it, massive bonus's for failures
    BoE - No Can do
    Banks - Ok, we'll go speak to George
    BoE - You win

  • rate this
    0

    Comment number 10.

    Banks would sell their grandmother if it made for a quick profit, so Robert yes I think they will sell Coutts.

  • rate this
    +1

    Comment number 9.

    Robert, I thought you were easing yourself back gently? Looks to me like you've hit the ground running...And now in the rather familiar territory of banks-but sell the Queen's bank; the bank's crown jewels, so to speak? One suspects the sounds of disapproval will be heard from Putney to Penzance over that one.

  • Comment number 8.

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

  • rate this
    +8

    Comment number 7.

    Alternativly if RBS is to weak to provide more credit, then maybe it shouldn't. I mean isn't this part of the problem? People, governments and banks living beyond their means. If they can't afford to do it, they shouldn't.

    Meanwhile the gov, should instead of printing money and give it to banks to prop up their balance sheets, should actually start giving it direct to businesses who need it.

  • rate this
    +15

    Comment number 6.

    6 years after the crisis and the whole situation is still mess.

    Osborne is unable to actual control anything or do anything positive.
    Nothing drastic like reducing income taxes.

    M King thinks he is bigger than the sun even though everything happened in his watch and economy is tanking while inflation is rising.

    FSA is clueless.

    And Balls is waiting on the sidelines. Any comedians out there?

  • rate this
    +7

    Comment number 5.

    "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..."

    So Mervyn thinks his friends at RBS should keep the good assets and the taxpayer should get all the bad "assets", does he?

    Thanks a bunch Merv! I thought you worked for us, the British people, but I guess I was wrong. So long, mate, and thanks for nowt!

    Pathetic!

  • Comment number 4.

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

  • rate this
    +5

    Comment number 3.

    Let me guess.....state owned banks will be sold off to the lowest bidder, and taxpayers will end up footing the bill.

    It already happened when part of Northern Rock was sold to "good bloke" Richard Branson, costing every taxpayer in the UK £13.

    Thanks Richard.

  • rate this
    0

    Comment number 2.

    It's a cosmetic gesture that will have no real effect on the country's balance sheet.

    The newly floated bank will simply be amalgamated into another bank in a few years anyway.
    The only way to tell will be some fancy print on some cheque books.
    That nobody uses anyway.

    Little cash for little cachet..

  • rate this
    +6

    Comment number 1.

    Breaking up ALL the big banks is the ONLY way to go. So long as they are too big to fail they MUST be broken up. It is as simple as that.

    The way to go is to split the shares of the old banks to create new enterprises and new balance sheets - the latter will be extremely difficult as banks still do not keep proper accounts!

    Mark to Market!!!!

 

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