George Osborne smoothes the way at EU for possible RBS split

The Chancellor George Osborne has paved the way for a possible break-up of the Royal Bank of Scotland (RBS) by seeking clearance from the European Union should he decide to split the lender into a good and bad bank.

The Financial Times reported that Osborne filed papers in July to the European Commission informing it of possible measures at RBS which could involve more state funding.

The paper reported that the move is aimed at avoiding stricter EU conditions on state support to banks and a cap on executive pay which came into force days after the chancellor filed the papers.

In June, Osborne outlined the possibility of splitting RBS and subsequently commissioned Rothchilds to conduct a review into the idea.

According to the FT officials familiar with the case said the chancellor’s EU move did not prejudge the review which is due to conclude this month.