Royal Bank of Scotland shares have slumped by three per cent after it warned plans for an internal 'bad bank' with £38 billion of toxic loans will result in a substantial loss this year.
The bank had been threatened with a carve-up and nationalisation of its problem loans in a Treasury review, but will instead run down the assets at a faster rate..
The move means up to £4.5 billion to be written off in its balance sheet in the current financial year, causing shares to fall 12.9p to 354.7p.
George Osborne has been talking today as if RBS is at the start of a significant transformation, but not much appears to have changed.
There will be no 'bad bank' - Mervyn King's demand to split and sell the bank we own has hit the buffers, once and for all is the idea.