Although Chancellor George Osborne has so far opposed the move, government officials are in talks to spend £5bn on the remaining shares – the government already owns 82% – and fully nationalise the bank on fears the various schemes to promote lending, including the £1bn Funding for Lending plan, will fail to have the desired effect.
The FT reported ministers believe banks are putting in place barriers to lending to companies and by fully nationalising it will be able to force the bank into action.
However, Osborne is reluctant for the British taxpayer to take on yet more bank debt.
Results from RBS tomorrow are expected to include over £1bn of losses due to money put aside for compensation for customers who were victims of its IT system collapse, PPI claims as well as potential fines for its alleged involvement in the LIBOR-rigging scandal.
