RBS re-launch expected this week with reforms

28th Oct 2013 09:43

The Royal Bank of Scotland (RBS) is expected to be re-launched this week with reforms including splitting the lender into a 'good bank' and a 'bad bank', according to the Financial Times.The bank will also on Friday release its third quarter results which are likely to be overshadowed by questions about whether the government will recommend hiving off bad loans into 'bad bank'.The government is trying to find a way to make it easier for RBS to lend by splitting off billions of pounds of risky loans.Rothschild and BlackRock have been reviewing the proposal and the result is expected to be unveiled at Friday's earnings report. The recommended overhaul is anticipated to include measures to free up capital for the bank to support a quicker rundown of the bad loans. Such measures might include bringing forward its planned sale of the US arm, Citizens and more cuts to its investment banking division.Chancellor George Osborne is expected to elect an internally managed bad bank rather than a more full-blown break-up. It would involve expanding and reshaping RBS's existing non-core division.A full-blown separation would see RBS's riskiest assets taken out of the bank and put into state ownership.The bank was bailed out by the government in 2008 during the height of the financial crisis. Shares rose 1% to 372.10p at 10:15 on Monday.RD