Royal Bank of Scotland

Lord Sharkey Excerpts

Wednesday 1st July 2015 Lords Chamber

Asked by

[Lord Sharkey]

To ask Her Majesty’s Government whether they will ensure that any review of their shares in Royal Bank of Scotland examines all options for the bank’s future, including alternatives to reprivatisation.

[Lord Ashton of Hyde (Con)]

My Lords, the Chancellor announced on 10 June that the Government intend to begin selling their shares in the Royal Bank of Scotland in the next few months. The Chancellor is acting on independent advice from the Governor of the Bank of England and a review by Rothschild that it is in the interests of taxpayers to begin now to sell our stake in RBS and return the bank to the private sector.

[Lord Sharkey (LD)]

That is very disappointing. We now have an opportunity to break up RBS into regional stakeholder banks. We know that these banks are better at lending to SMEs and more stable, and contribute more to regional growth. Will the Minister agree to publish a proper and full analysis of the comparative merits of different ways of dealing with RBS, including breaking it up into regional stakeholder banks?

[Lord Ashton of Hyde]

My Lords, it was never the intention of the Government to be a permanent investor in the UK banking sector. At a national level, both RBS and Lloyds are already in the process of divesting part of their UK banking businesses. The Government do not believe that the case for breaking up the core operations of any bank in which the Government have a stake into regional entities meets the objectives of maximising the bank’s ability to support the British economy, getting the best value for the taxpayer or facilitating a return to private ownership. The cost of reorganisation would be attributable to the banks and, as a result, would be fully borne by the taxpayer. The significant issue is the trade-off between the costs, which are certain and significant, and the benefits, which are uncertain.