Business World

Sunday 17 December 2017

Britain urged to widen its RBS 'bad bank' plan

John Mulligan

John Mulligan

THE UK government should broaden its 'bad bank' plan for Ulster Bank owner RBS, says a report by analysts at UBS.

It urges the government to ignore plans to create a small 'bad bank' and instead extend it in order to place billions of pounds of its legacy businesses in the hands of the taxpayer.

The report advises that RBS should hive off its US Citizens banking business and Ulster Bank as part of an overhaul that would create a new RBS that could be more easily privatised. RBS is 81pc-owned by the UK government.

Existing RBS shareholders would take a one-third stake in the 'good bank', with the government owning the rest.

The entire 'bad bank' would then be fully controlled by the government.

Shares in the new RBS would be worth £5.40 (€6.44) each, claims UBS. That's more than the £5 it would take for the UK taxpayer to break even.

UBS has suggested the 'bad bank' element could then be run down in the same way as Northern Rock and Bradford & Bingley.

Irish Independent

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