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 Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 35.

    Too boring to comment on!

  • rate this

    Comment number 34.

    Lets send our money to Syria, armoured trucks aren't lethal, neither are assault rifles - it's what's inside that counts but no HYS on that..........

  • rate this

    Comment number 33.

    It's noticeable that the Governor of the BoE has become more outspoken now that he's into the final few months of his tenure.

    Too little, too late Merv.

  • rate this

    Comment number 32.

    I really am not equipped to answer your question.Perhaps you can help people like me.
    Banks no longer lend money like they used to do.
    But PayDay Loans are readily available.Who is behind such companies?Where do they get their money from?
    Seems to me they like Advertising their product....But a bit shy of saying exaxctly who owns them.And seem proud to profit from vulnerable people.

  • rate this

    Comment number 31.

    No 28 Forgot to mention - I assume it will be in the banking sectors interest and not the people. They just don't think that way!

  • rate this

    Comment number 30.

    What ever happened to Northern Rock?

  • rate this

    Comment number 29.

    I wonder if we, the taxpayer, will see any benefit at all for whatever proceeds come out of whatever is left of RBS that has any value. Maybe I've grown too cynical of our political leaders but it's hard to see it accomplishing anything other than a bit more money for the government to waste before complaining it has no money and raising taxes again.

  • rate this

    Comment number 28.

    Do we assume they have decided RBS is a dead duck?

    By selling off the good bits to the remaining banks that, in round about way, instantly strengthens these banks and from there they can finally start lending to business?

  • rate this

    Comment number 27.

    Again bankers will asset strip somthing for short term profit and ofcourse a nice healthy bonus and give somthing to their mates in other banks and we the tax payer will be left with nothing but toxic debt and the bankers will all walk away giggling like Gideon does knowing that the thick plebs have been fleeced again.

  • rate this

    Comment number 26.

    Sounds like a pre-cursor to a bout of asset-stripping by RBS that will be of no benefit to the tax-paying electorate who bailed them out of the mess they helped create in the first place?

    I think you can probably say something similar to any announcement coming from the Govt these days

  • rate this

    Comment number 25.

    By selling Coutts, RBS would be starting the process of flogging off the good assets leaving RBS with the bad. Then the tax payer will be left holding dross

  • rate this

    Comment number 24.

    I give up. What is it about we Brits. We completely messed up our manufacturing base- outdated management & manufacturing processes producing out classed & overpriced products. Now we have ruined the banking/finance sectors- incompetent management & some completely useless unecessary products. Are we capable of anything or as someone said recently, as a nation & as people are we just debt junkies.

  • rate this

    Comment number 23.

    All he seems to be doing is preparing the ground for his mate at No11, so that in true Tory style they start selling off the assets (as the Tories always do) just before an Election, and start bribing voters. This may be the irony of the Labour legacy that the Tories won't complain about as they left them asset rich.

  • rate this

    Comment number 22.

    Strange as it may seem the only banks to 'survive' the financial collapse relatively unscathed were later found guilty of bribery, fraud, interest rate rigging and money laundering.
    Perhaps this method of banking will be the blueprint for future 'successful' banks.

  • rate this

    Comment number 21.

    I feel sorry for Stephen Hester. He's done a fantastic job of cleaning the balance sheet of RBS, taking flak as operating profits were drowned with huge and necessary write downs. And to be floated, RBS's balance sheet will have to be much whiter than other banks, which aren't subject to the same market scrutiny. King is rocking the boat here, and I can't work out why.

  • rate this

    Comment number 20.

    managing director?

  • rate this

    Comment number 19.

    GO says he would'nt be able to sell the idea of hiving off the good bits of RBS and putting the trash onto the national debt.

    Perhaps he needs Cameron to do it for him. After all we have the worst of both worlds at the moment. A ZOMBIE bank that can't lend or make a profit.

    National debt is huge already so not much difference and we will get some money back. Bird in the hand and all that.

  • rate this

    Comment number 18.

    Watch out for Mervyn King's autobiography: "Floggin' a dead horse."

    The banking mantra is quite simply "If you tell lies often and consistently eventually people start to believe it", is it not?

  • rate this

    Comment number 17.

    @ Graphis you already can it's called bitcoin.

  • Comment number 16.

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


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