Q and A: What could happen to RBS?

Q Is the bank going to be split up? What would that mean?

A One option is to carve out RBS’ bad assets, largely in Ulster Bank, into a state-backed bad bank. This would be similar to what happened to Northern Rock and would improve RBS’ balance sheet, letting it lend more.

Q That sounds good. Are there any downsides?

A There are – RBS spent years merging with Ulster Bank, and it would be complex and expensive to cut it out again. It could also take a good chunk of RBS’ capital with it, undermining its ability to lend more and even risking needing more taxpayer money. On top of that, it could be difficult to get approval from private shareholders.

Q Are there any other options?

A RBS could be left on its current track, but that is taking too long for politicians’ liking. So they could try to accelerate that plan, even if it is a bit more expensive for RBS.

Q What would that entail?

A It would probably mean selling off some of the bad loan book, getting money for the loans which could be given out as new loans. And the plan to make RBS focus on the UK could also speed up, selling off US lender Citizens faster, again gaining more resources to spend in the UK.