Government considering full nationalisation of RBS, FT says

The British government is seriously considering fully nationalising Royal Bank of Scotland (RBS) in an effort to kick start lending to businesses, according to the Financial Times.

The paper claims ministers are becoming "exasperated" that the bank, which is 83% owned by the taxpayer, is not lending enough to the British economy.

Apparently the government wants to force the company to lend more but is worried about opposition from other shareholders. The solution seems quite straight-forward: spend £5bn buying them out.

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George Osborne is said to be opposed to the plan, but with the British economy in a severe double dip recession, the pressure on the Chancellor to stimulate growth is intense.

As well, some commentators add that such a measure could actually hinder the correct functioning of the new Funding for Lending Scheme.

BS