LONDON (Reuters) - Britain’s finance ministry has appointed investment bank Rothschild ROT.UL to advise on the potential break-up of part-nationalized Royal Bank of Scotland RBS.L.
Finance Minister George Osborne said in June that Britain would examine whether to split the bank up, after acknowledging a sale of the government’s 81 percent stake in the bank remained a long way off.
The Treasury said on Wednesday Rothschild would provide financial advice on the case for transferring RBS’s remaining toxic loans into a so-called “bad bank”. Slaughter & May will provide legal advice in the review, which is expected to be completed by the autumn.
Rothschild will receive 850,000 pounds ($1.3 million) for its advice, a source familiar with the matter said, a cost that could be picked up by RBS. Details of the contract will be published in the next three weeks.
RBS and Rothschild declined to comment.
The Treasury said more external advisors, including those specializing in asset valuation, would be appointed in coming weeks.
RBS, still lumbered with toxic loans from a boom-era property binge in the UK and Ireland and buffeted by its role in a global interest rate-fixing scandal, remains a thorn in the side of the government and the wider economy.
In his annual address to London’s financial elite, Osborne said RBS probably should have been split into a good bank and its soured assets hived off into a bad bank in 2008, when the lender was close to collapse.
Osborne also signaled the government’s intention to start selling shares in Lloyds Banking Group LLOY.L.
($1 = 0.6554 British pounds)
Additional reporting by Steve Slater; Editing by David Holmes