Plea to consider break-up of banks

The banker, former RBS chief executive and chairman George Mathewson, made his comments in a submission to the Independent Commission on Banking (ICB). The Commission is considering whether big banks need to be broken up after the financial crisis, when RBS and Lloyds had to be rescued with huge taxpayer bailouts.

“The Independent Commission should seriously consider requiring RBS to sell off all of its insurance business and to split into two separate banks which would be RBS and NatWest,” said Mr Mathewson, who masterminded RBS’s £20bn takeover of NatWest in 2000.

“I do believe, that in the interests of competition, the merger of HBOS and Lloyds was misconceived and Lloyds Banking Group should be broken up,” he added.

The ICB said opinion was divided over whether the top banks should be split, and whether or not retail banking should be separated from investment banking.

Nationwide told the ICB that regulatory segregation of retail and investment banking might be better than a full split of the two. Nationwide said that while splitting retail and investment banks was an option worth considering, it might be better to choose a more subtle distancing between the different business lines rather than a full break-up.