The Parliamentary Commission on Banking Standards has produced a draft report calling for the Royal Bank of Scotland (RBS) to be split into two halves in order to restore it to health.
According to the BBC’s business editor Robert Peston, those on the commission have until Monday 10 June to read and contemplate the proposals before debating them, although there is some uncertainty as to whether or not the Prime Minister and the Chancellor would support the recommendations. In the past, they have been unsupportive of the plans due to concerns it would slow the privatisation of RBS.
The theory is that privatising the ‘good’ parts of the bank would boost its share price and access to finance, allowing it to provide credit to customers and boosting the UK economy. The ‘bad’ parts of the bank (representing roughly £54.6 billion in assets) could be removed from the bank and held on the government’s balance sheet until they’ve been repaid.
It may be a large and daunting undertaking, however many believe a radical restructure is necessary for this vitally important bank to return to health. Read the full story on the BBC website.