LONDON, March 6 Britain must push one of its
biggest banks, Royal Bank of Scotland, to undergo a deep
restructuring to split off bad assets still on its books and
recapitalize, the head of the Bank of England said on Wednesday.
Mervyn King - making his strongest criticisms to date on how
RBS is run just weeks before the Bank of England takes on new
powers to oversee banks - said it was "nonsense" that the
government did not have more direct control over RBS which was
bailed out with taxpayers' money.
"The whole idea of a bank being 82 percent owned by the
taxpayer, run at arms' length from the government, is a
nonsense. It cannot make any sense," King told a parliamentary
"The arguments for restructuring sooner rather than later
are powerful ones."
Shares in RBS fell after King's comments and were trading at
312 pence at 1040 GMT, down 0.8 percent on the day.
The BoE has repeatedly urged British banks to raise capital
levels to help protect them against a repeat of the kind of
shocks that triggered the financial crisis.
King said it should not take more than a year to a carry out
a much more decisive restructuring of RBS than efforts to date.
The BoE has taken an increasingly tough line on the amount
of capital banks hold and the government has chosen Bank of
Canada governor Mark Carney, a leader of the global push for
stronger banking regulation, to succeed King at the BoE in July.