Britain to start sale of Lloyds soon, review RBS split

Britain is ready to start selling its shares in Lloyds Banking Group and will examine whether to break up Royal Bank of Scotland, Finance Minister George Osborne said, after acknowledging the re-privatisation of RBS remains a long way off.

The government is keen to show Britain’s part-nationalised banks are recovering from the 2008 financial crisis and a profitable sale of part of its 39 per cent stake in Lloyds would allow it to claim at least partial success ahead of the next election in 2015.

Royal Bank of Scotland, 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, which is struggling to recover.

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 so-called “bad bank” in 2008 when the lender was close to collapse.

“I can tell you today that we will urgently investigate the case for taking the bad assets - those mistakes of the past - out of RBS,” Osborne told the audience in the Mansion House, the residence of the mayor of London’s financial district.

“We will judge whether this will allow the bank to focus on its future supporting the British economy. We will see whether it’s right for Britain to, in effect, see RBS broken up.”