Just when staff at The Royal Bank of Scotland thought that it couldn't get any worse, The Financial Times has reported that there has been some debate within the UK Cabinet about whether the firm, 83% owned by the taxpayer, should be fully nationalized.
The thinking, mainly of Business Secretary Vince Cable by all accounts, is that it might be worth coughing up the $7.8bn required to buy out the remaining shareholders, take full control, and then use the bank to lend to small and medium sized companies in order to stimulate the economy. Chancellor George Osborne, however, is thought not to share Cable's enthusiasm for the project.
UK banks have come unde fire since the financial crisis for their cautious approach to lending, and Cable is said to believe that only a government-owned entity can now push out the money into the economy.
One commercial banker told Here Is The City, however: 'It is amazing that the so-called Business Secretary has completely misunderstood this issue.
'It's not that banks don't want to lend, but rather that businesses are reluctant to borrow. Confidence in the economy is near an all-time low, and businesses are just not prepared to gamble that borrowing more money will lead to increased profits. Cable needs to focus instead on cutting government red-tape and relaxing the draconian UK employment laws - then businesses might feel inclined to push the boat out a little'.