RBS shares lose 7% after it decides against 'bad bank' split

Andrew Tyrie

Royal Bank of Scotland shares have lost 7.5% following news the 81% state-owned bank will not split itself into separate so-called good and bad banks.

RBS will create an internal "bad bank", ring-fencing £38bn of poor quality assets, such as loans it does not expect to see repaid.

However, some have questioned whether RBS would have been better splitting off its bad assets.

RBS also launched a review of how it treats its customers.

One leading figure who will look hard at the ring-fence plan is the Conservative MP Andrew Tyrie , who chairs the Treasury Committee and presided over a report this summer that recommended that the government should look in detail at the case for splitting the good and bad assets.

He told newsmen at one programme he would be looking into the reasoning behind the government's decision.

"The question... is whether this restructuring is enough to turn RBS round in reasonable time. I hope so but I remain concerned that it might not," he said.

RBS's shares were among the heaviest fallers on the FTSE 100 share index in Friday trading, down more than 7% at 340p.