Mervyn King calls for RBS break up

City A.M. Reporter

BANK of England governor Sir Mervyn King today called on the government to break up state-backed RBS so it can return to health and be sold to the private sector.

Sir Mervyn told the Banking Standards Commission that the bank needs to separate off the bad assets, and build up capital in the “good bank” so it can lend more.

The central bank chief also said it was "nonsense" that the government, which bailed out RBS during the 2008 financial crisis, did not have more direct control of the country's fourth-largest bank.

"The whole idea of a bank being 82 per cent owned by the taxpayer, run at arm's length from the government, is a nonsense," Sir Mervyn told the committee today.

"The arguments for restructuring sooner rather than later are powerful ones."

RBS has already undergone a massive restructuring following the bail out five years ago, which saw the government pump in £45.5bn to keep it afloat.