Capital issues at RBS need to be addressed, says UKFI

12th Nov 2013 14:02

It is too early to tell when shares of Royal Bank of Scotland held by the government can be sold, according to the head of the UK Financial Investments (UKFI).James Leigh-Pemberton, who is set to become the UKFI's Chairman in January, said that the bank should address issues over its capital and future strategy before the Treasury can begin selling down its 81% stake.He said that the result of RBS's strategic review, initiated by new Chief Executive Officer Ross McEwan, would be crucial to this decision. This outcome of the review is due in February 2014.The UKFI manages the government's stakes in RBS and Lloyds following the state bailouts in 2008.Speaking to the Treasury Select Committee on Tuesday, Leigh-Pemberton said there are "certain issues" at the bank which "absolutely have to be tackled as a precursor to successful reprivatisation".These factors include sufficient capital, strategic focus on businesses where they enjoy competitive advantage and higher returns and the normalisation of the capital structure, he said. Speaking of the recent controversial move by RBS to create an internal 'bad bank' to manage the run-down of high-risk assets, Leigh-Pemberton said it could give the UKFI "scope to act a little faster".The stock was trading 2.88% lower at 330p on Tuesday afternoon.BC