LONDON, March 26 Splitting the state-backed
Royal Bank of Scotland to rid it of bad assets is an
option but would be a slow process, Britain's finance ministry
said on Tuesday.
A ministry official speaking to lawmakers alongside finance
minister George Osborne said: "Obviously this is an option."
Osborne sounded cautious about the prospect.
"While of course we can discuss the merits and demerits of a
good bank-bad bank split, I don't think it could be very swiftly
delivered," he said.
Osborne also said it was unclear that a cleaned-up RBS would
be better able to lend to the real economy and so provide a
quick boost to growth.
The ministry official added that if bad assets were taken
out of RBS, "the good bank would incur a capital loss and that
would create a hole in the organisation's balance sheet".
Controversy over lending to loan-starved small businesses
and executive bonus payments have dogged the government's
dealings with the bank, which is 82-percent owned by the state
but independent of ministerial control.