MPs push for break-up of RBS

The chairman of the Parliamentary Commission on Banking Standards stated in a letter that it is “important for all the options for [RBS’s] future structure to be examined as a matter of urgency”.

George Osborne, chancellor, has ordered a report this autumn on whether moving old toxic loans into a state-owned bad bank would aid RBS’s recovery and allow it to increase business lending.

In the letter in the FT today (27 August) Mr Tyrie said: “Taking the bad assets into a publicly owned entity at their true value does nothing to alter the underlying position of the economy, the public sector’s net worth, or the future burden of taxation.

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“On some treatments, recorded public debt may rise, but that would only be because the value of the assets being taken over is not already being taken into account, even though they are already publicly owned.

“The chancellor’s review also needs to examine whether, over time, the taxpayer may in fact be better off as a result of a split.

“Formal accounting conventions should not be allowed to get in the way of what is best for the economy in general and the SME sector, for whom bank finance is particularly important.

“From this work we should soon get to the point where RBS is playing a full role in supporting the economy, and much sooner than would otherwise be the case.”