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Did Sir Mervyn King vow to see RBS split before he retires?

A Royal Bank of Scotland branch is seen in central London. Photo: REUTERS/Luke MacGregor

It is plain that the Commission on Banking Standards may have a real tussle over agreeing the final draft of their report. There are clearly divisions over whether to back the idea of splitting up and selling off RBS, which would of course require one part of the bank, the bit that retains the nasty remnants of its worst days, to be nationalised.

What is so interesting about the Commission even considering this recommendation is that unusually, especially in such a lengthy and wide ranging enquiry, the only witness they questioned about this idea was the Governor of the Bank of England, Sir Mervyn King.

Governor of the Bank of England Sir Mervyn King. Credit: David Jones/PA Wire

It was no secret that he had argued previously for a nationalisation of RBS, but it certainly raised eyebrows that he was making the case five years on.

I've been told that after King delivered his message to the Commission in March, RBS was more than curious as to why he felt the need to raise the idea again, especially in such a public way.

Senior figures at RBS have complained to me many times that interference from the Governor or politicians is less than helpful.

They've also complained privately that the Governor has not always made as much effort as he might have done to talk to the bank themselves. So the chairman of the bank, Sir Philip Hampton, went to see the Governor to make polite inquiries as to what he was up to.

Royal Bank of Scotland Chairman Sir Philip Hampton. Credit: David Cheskin/PA Wire

At the meeting between the two men the Governor made his position plain, restating his belief that nationalising part of the bank would be best, splitting it up and selling off the other part. What's more, I'm told that Sir Mervyn suggested that during his last three months in the job, he would continue to press the case, and would do everything he could to make his idea of 'split and sell' happen before his retirement.

Neither the Bank of England nor RBS wanted to comment. But it is intriguing to note the timing of how this has happened.

Three months ago in a private meeting the Governor made clear he would continue to push the case. Three months later, just before King is due to stand down, an early draft of a Commission report that is a long way from being approved adopts his argument.

Select Committees have enhanced their reputation in recent years, for following the evidence, trying to stay away from being partisan, and basing their recommendations on the information they gather. Having only taken evidence from the Governor on this plan, can they really put this in the report?

One senior source suggested to me today that when it comes to nationalising part of RBS 'it's not at all clear what the evidence is other than the assertion'.

Those members of the Commission, including the Archbishop of Canterbury and Lord Lawson who have supported the Governor's idea, who do believe there is evidence, may have a tough couple of weeks ahead of them if they've hope of persuading their colleagues to back the plan.

The Archbishop of Canterbury Justin Welby is on the Commission. Credit: Jack Hill/The Times/PA Wire

The Governor himself may have vowed to keep making the case, but whether this Commission buys it is another question altogether.

The final report is expected to be published in the next fortnight before the Chancellor's Mansion House Speech on June the 19th.