To help provide the economic situation in the UK with some much needed funding, there are contemplations of splitting the troublesome Royal Bank of Scotland into two banks, one “good” and the other “bad” to help alleviate the problem.
However, ratings firm Fitch has said that the price of making this split could actually be more damaging than the money raised.
The company stated that the “bad bank” split might cause obstacles and uncertainty, which could end up being worse than the bank remaining as it is.
Their findings have emerged as Rothschild’s investment executives analyse whether the bank, a recipient of significant bailout funding, should be divided. One aspect of the Royal Bank of Scotland, Ulster Bank, is likely to be moved to the “bad bank” section, as are commercial property loans.
The government is commissioned Rothschild’s analysis to see if credit can be provided to the UK’s economy, and whether the sale of the taxpayers’ hefty 81% share of the company would help.
The review was ordered in June of this year, which heralded George Osborne’s statement that he was thinking of divesting the stake of the taxpayers.
In other Royal Bank of Scotland news, the Financial Times has reported that the bank is in latter stage discussions with Bank of England regulators to place Ross McEwan in the role of Chief Executive Officer.
The new appointment would be as a replacement for Stephen Hester, who left the bank in July 2013. According to the newspaper, McEwan is a lead favourite with the board.
However, no confirmation from the Prudential Regulation Authority of England has been made and Bruce van Saun, the bank’s current director of finance, is one candidate for the replacement.
McEwan is from New Zealand, and was chosen to oversee the Royal Bank of Scotlands retail banking sector last year in August. Prior t this, he was in charge of retail banking at the Commonwealth Bank of Australia, giving him ample experience for the role.
For more information on the Royal Bank of Scotland situation, please read my Slide Share.