RBS investor thinks bank split 'unlikely'

  • 28 October 2013
  • From the section Business
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Image caption Supporters of a break-up of RBS include former Bank of England governor Sir Mervyn King

An institutional shareholder in Royal Bank of Scotland thinks it is "extremely unlikely" state-backed RBS will be split into good and bad banks.

Standard Life Investments's (SLI) global head of equities, David Cumming, told the BBC such a move would be an "unnecessary distraction".

Edinburgh-based SLI is one of the biggest institutional investors in RBS.

A UK government-commissioned report on the issue is imminent and may emerge with RBS's quarterly results on Friday.

RBS, which was bailed out for £45bn in 2008 at the height of the financial crisis, is 81% taxpayer-owned.

Investment bank Rothschild has been tasked with setting out the pros and cons of the separation of RBS's non-core division into a new "bad bank".

'Acceptable outcome'

But Mr Cumming said: "I think the creation or a separate, nationalised, bad bank, is extremely unlikely.

"I think RBS has been running down their non-core assets, ie the bad bank, pretty efficiently over the past few years, and I don't think a breakup would improve the process."

He said he believed this was a view that Chancellor George Osborne and the Rothschilds were coming to now.

Mr Cumming added: "I think, however, to appease the politicians, they will do something, so I think you will get a more formalised process of a creation of a bad bank within RBS.

"And maybe they will state that they are going to run the non-core assets, or bad bank, down more quickly, and I think that will probably be a more acceptable outcome."

Supporters of a break-up of RBS include former Bank of England governor Sir Mervyn King and ex-UK Chancellor Nigel Lawson.

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