Govt considers full nationalisation of RBS

2 August 2012 | By Paul Thomas

The Government is discussing the possibility of fully nationalising Royal Bank of Scotland after growing frustrated at its failure to lend to UK businesses.

According to a report in the Financial Times, Cabinet ministers are discussing whether to spend around £5bn to buy the remaining 18 per cent of the bank the Government does not own. However, the report states Chancellor George Osborne is against this idea.

The Government bailed-out RBS in October 2008 with £45.4bn of taxpayers’ money, to prevent it from collapsing following its near-ruinous acquisition of ABN Amro.

The Government has tried various schemes to free up credit, like its flagship Funding for Lending scheme, which launched yesterday, although the report states some Cabinet ministers believe these schemes have not worked and forcing RBS to lend is the only thing left it can do to kickstart bank lending.

An unnamed official told the FT: “This is a conversation that takes place all the time.” Another unnamed official said calls for the nationalisation of RBS had grown after poor growth figures in the second quarter and the bank’s continued inability to clear up its balance sheet.

However, the report states several people close to RBS said full nationalisation is unlikely.

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