Investigation into splitting RBS into smaller parts ruled out

9 July 2013

The UK government has ruled out an investigation into whether the Royal Bank of Scotland (RBS) should be split and sold off in smaller segments rather than as one.

RBS is now majority-owned by the state after a bail-out was required during the financial crisis.

The aim to sell the bank in smaller component parts is to boost competition in the overall banking sector, the Guardian reports.

Currently the sale of RBS is seen as a distant prospect for the coalition and it is mainly focused on Lloyds, which has recently reached its highest share price in over two and a half years.

The parliamentary commission on banking standards has said a wide-ranging review of the structure of RBS is needed, although the government has claimed splitting it into smaller chunks would create significant additional costs.

However, chancellor George Osborne has brought in Rothschild, the investment firm, to look at cutting off a 'bad' bank from RBS. This is delaying the selling of shares and is not going as far as the parliamentary commission wanted.

By Gary Cooper

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