The British government should split its bailed-out Royal Bank of Scotland and create a business bank dedicated to boosting lending to companies and supporting exports, business secretary Vince Cable said in an internal government letter.
Britain owns 82 per cent of the loss-making RBS – the parent of Ulster Bank – after rescuing it along with Lloyds Banking Group during the 2008 financial crisis.
Mr Cable, a Liberal Democrat, is a long-time critic of the banking system for failing to lend enough to business and who had previously pushed for deposit- taking banks to be separated from their investment divisions.
“My suggestion is that we recognise that RBS will not return to the market in its current shape and use its time as ward of state to carve out of it a British business bank with a clean balance sheet and a mandate to expand lending rapidly to sound business,” he wrote in the letter published by the BBC and confirmed by Mr Cable’s department as genuine.
The letter, dated February 8th, was addressed to prime minister David Cameron and his deputy, Nick Clegg.– (Reuters)
