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May 14, 2013

Bank Bailout Blues Stall U.K. Recovery

“Five years after rescuing one of the world’s biggest banks, the British government still hasn’t figured out what to do with it—a sign of the country’s struggle to put its banking woes behind it.”

“Royal Bank of Scotland Group PLC received a bailout of £45 billion, or about $70 billion, in 2008. Today, it remains 81%-owned by U.K. taxpayers, and a return to private hands is unlikely soon, according to government officials. Under pressure from the Bank of England, officials at the U.K. Treasury have been studying splitting up RBS, with one part fully nationalized and the remainder devoted to serving British businesses and individuals, officials say.”

“It is unclear whether the breakup idea will come to fruition, because government officials worry it might be too complex and risky to justify the potential benefits. But with an election looming in 2015, the U.K.’s coalition government is under pressure to act. The debate over how to fix the banking system has mushroomed into a political brawl, dragging in parties ranging from the head of the Bank of England to the archbishop of Canterbury.”

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Read the full Wall Street Journal article here

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