British Business Secretary Vince Cable has cooled expectations over Royal Bank of Scotland’s return to private ownership by signalling it may be in public hands for another five years.
Cable said he believed there was little prospect of any sale taking place before the next election in 2015 and that it is probable that the state will have a stake for the majority of the next parliament as well.
His comments to the Sunday Telegraph conflict with remarks by David Cameron, who has said that the stake should be sold as soon as possible, while RBS’s chairman Sir Philip Hampton believes that the process could begin next year.
Mr Cable said: “I don’t think it would be sensible for the Government to set a rigid timetable, but given where we start from I think it is pretty unrealistic to think of RBS going back into private ownership this Parliament or probably within five years.”
The prospect of a lengthy spell in private ownership will increase the pressure on the bank to be broken up, with assets such as Ulster Bank and RBS’s £63bn (€73.3bn) commercial property book hived off and recapitalised separately.
Investment bank Rothschild has been tasked with reviewing whether the 81% state-owned lender should be split into a ”good” and ”bad” bank.
Mr Cable added: “I think there is a very strong argument for saying that the bank got too big and indeed that was the source of its undoing.
“But we are having to balance the benefits of breaking up the bank (and) the potential benefits for competition (with) the significant costs, particularly in terms of disrupting IT systems.
“My colleagues in the Treasury are doing very detailed work on that cost-benefit calculation, because there is no simple yes or no answer.”
A longer spell with the Government’s stake still in place will also increase pressure on the bank to extend more credit to the economy.
Asked if RBS would be better as a UK-focused retail and corporate bank, Mr Cable told the paper: “The Chancellor and I have the same view about this. We are not nationalists and of course there is an argument for international banking.
“But we do need to have strong UK banks, particularly supporting our business community. At the moment that market does not function well.”