Britain to start sale of Lloyds soon, review RBS split
By Matt Scuffham and David Milliken
LONDON (Reuters) - Britain is ready to start selling its shares in Lloyds Banking Group (LLOY.L: Quote) and will examine whether to break up Royal Bank of Scotland (RBS.L: Quote), Finance Minister George Osborne said, admitting the re-privatization of RBS remains a long way off.
The government is keen to show Britain's part-nationalized banks are recovering from the 2008 financial crisis and a profitable sale of part of its 39 percent stake in Lloyds would allow it to claim at least partial success ahead of the next election in 2015.
Osborne's decision to investigate hiving off RBS's weak assets, largely soured property loans in Ireland and Britain, into a so-called "bad bank" comes after a parliamentary commission he appointed recommended such an analysis earlier on Wednesday.
The finance minister had previously dismissed breaking up RBS as too costly and disruptive and in his annual address to financiers in the City of London he said such a split would only happen if it was in the best interests of taxpayers and didn't require them to put any additional capital into the bank.
"We will establish a Bad Bank if it meets our three objectives: if it supports the British economy; if it's in the interests of taxpayers - and if it accelerates the return to private ownership," he said.
The review, which will be completed in the autumn, marks another jolt for Royal Bank of Scotland, whose chief executive Stephen Hester was ousted last week with the green light from Osborne.
RBS's chairman said he welcomed the government's plans.
"Proposals that could speed RBS's privatization while allowing us to support our customers deserve thorough consideration. Ultimately any change to our strategy would need to be in the interests of all shareholders," Philip Hampton said in a statement. Continued...