RBS: Osborne asks Europe for sell off approval

Picture: Getty
Picture: Getty
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CHANCELLOR George Osborne has sought approval from European Union officials to sell off profitable parts of the Royal Bank of Scotland.

Mr Osborne has filed papers with officials in Brussels setting out plans to split up RBS ahead of a possible partial privatisation of the 82 per cent taxpayer-owned bank.

The move would allow for profitable parts of RBS, such as its lending to companies sector, to be sold off, while less successful parts are retained.

Mr Osborne’s plan aims to avoid stricter EU conditions with a £471,000 cap on executive pay as well as restrictions on state support for banks such as RBS, which was bailed out with £45 billion of taxpayers’ cash during the banking crisis.

His approach to the European Commission in July came just days before new rules from Brussels came into force that would have constrained the UK government’s options.

An EU spokesman said yesterday, the commission had “received the notification in July and the assessment is now in progress”.

Meanwhile, a Treasury review into whether hiving off toxic assets into a state-owned “bad bank” would boost RBS’s economic recovery is also due to conclude this autumn. Parts such as Ulster Bank, which has performed badly in the property loans market, could be part of the state-retained bad assets.

Some Treasury officials and bankers at Rothschild, who are advising the Chancellor, are understood to be cautious about the benefits of placing a large asset portfolio in an external bad bank. However, some senior RBS bankers are thought to favour the idea of shedding the group’s weakest assets and selling off the most profitable parts

The break-up would be disruptive and could upset hopes, at the bank that reprivatisation of the massive taxpayer stake in RBS could begin before the 2015 General Election.

A Treasury official confirmed it had been involved in talks with the EU over state-aid rules, but would not comment on the prospect of an RBS sale. The spokesman said: “The government speaks to the European Commission daily on a range of issues, including on matters related to European state-aid rules, but does not provide a running commentary on discussions.”

However, SNP MSP John Wilson criticised Mr Osborne’s move to get approval for a partial privatisation of an asset largely owned by the taxpayer.

He said: “This is the way the Conservatives behave to protect vested interests in big business. Selling off the profitable part of the bank and leaving the public purse carrying the less profitable bit will put even more pressure on families who have suffered from austerity.”

Scottish Labour’s finance spokesman Iain Gray said: “There’s an opportunity here to make the most out of a bad situation with bailing out RBS and the Government need to think about that and what would be in the best interests of taxpayers.”

Taxing system

THE UK’s tax system is ‘complex and costly’, a team of economic advisers appointed by the SNP government has claimed in a report on taxation in an independent Scotland.

Billions of pounds is lost to the UK, through tax avoidance the Fiscal Commission Working Group claimed in a report published today.

The report suggests taxation could be overhauled in an independent Scotland, with a less complex, more modern set of rules in place.

Finance secretary John Swinney said the Scottish government was already reforming tax to make it ‘cheaper to collect’, as well as proposing a general anti-avoidance rule to crack down on tax dodgers.