BoE governor calls on govt to ‘decisively’ restructure RBS

LONDON: Bank of England Governor Mervyn King urged the government to “decisively” restructure Royal Bank of Scotland Group Plc (RBS) to speed up the lender’s return to private ownership after its bailout in 2008.

“We’re four and half years on and there’s no sign of it going back to the private sector,” King told the Parliamentary Commission on Banking Standards in London on Wednesday. “That indicates we’ve not been sufficiently decisive in recapitalizing or restructuring it.”

RBS should be split into a good bank that could fund itself and a bad bank where loss-making assets would be transferred, King told lawmakers on Wednesday. That would require the lender to recognize losses on some assets, he said. The government is pressing Edinburgh-based RBS to sell more assets and bolster capital as it tries to recoup some of the £45.5 billion ($69 billion) it pumped into the lender.

Chief executive officer Stephen Hester has cut assets by more than £906 billion, eliminated 36,000 jobs and scaled back the securities unit since he took over from Fred Goodwin. RBS has fallen 3.5% in London trading so far this year.

The shares were up 0.1% at 313.2 pence as of 11 am on Wednesday. The government values its stake in the bank at about 407 pence a share, three officials with knowledge of the matter said last week.

RBS said last month it would sell a stake in Citizens Financial Group, the US consumer and commercial lender it acquired in 1988, and further pare back its investment-banking unit after coming under pressure from the government and regulators.