U.K. Government Said to Hire Rothschild to Advise on RBS SplitSvenja O’Donnell and Howard Mustoe
The U.K. government plans to hire Rothschild to help review the case for breaking up Royal Bank of Scotland Group Plc, two people with knowledge of the talks said.
Rothschild will advise the government on the case for separating the lender’s worst-performing assets to create a healthier bank, said the people, who asked not to be identified before a public announcement.
Britain should consider splitting Edinburgh-based RBS to spin off its toxic loans into a “bad bank,” the Parliamentary Commission on Banking Standards said in a report in June. Chancellor of the Exchequer George Osborne, who subsequently called for the review into the bank’s structure, ruled out injecting more taxpayers’ money into the 81 percent government-owned lender or increasing the state’s stake.
RBS received 45.5 billion pounds ($69 billion), the costliest bank bailout in history, during the global financial crisis and the shares remain below the level at which taxpayers would break even.
Officials at the Treasury, Rothschild and RBS declined to comment on the appointment, which was first reported by the Financial Times.
The timing of a possible RBS sale was thrown into confusion last month after Chief Executive Officer Stephen Hester announced he would quit by the end of the year, without announcing a successor, instead of leading the bank out of state control. Chairman Philip Hampton had suggested the bank would be in shape for the government to start cutting its stake by the end of 2014, months before the next general election.
In the review of RBS, the Treasury will particularly examine its assets in Ulster Bank and U.K. commercial property, the chancellor has said. RBS has channeled about a third, or 14 billion pounds, of its bailout to prop up its Irish division since 2009. A decision on the future structure of RBS will be taken later this year, Osborne said last month.
Meanwhile the U.K. government is “actively considering” selling shares in Lloyds Banking Group Plc to reduce its 39 percent holding, Osborne said at the time.