Calls for break-up of RBS after it racks up £2.5bn of losses for 2016

Following Friday’s news that still 73 per cent state-owned Royal Bank of Scotland has lost £2.5 billion so far this year, calls have been made for the UK government to use its stake to break up the lender.

RBS’s third quarter results were published on Friday showed losses of £469 million in the last three months and Liberal Democrat Treasury spokesman Susan Kramer reacted by announcing that the Edinburgh-based bank should now be restructured.

Ms Kramer said it was “time for the Government to face reality”.

She said: “We cannot keep holding RBS on our books indefinitely in the hope of a magical turnaround in its fortunes.

“The Government must use its stake in RBS to restructure the bank and create a new regional and community banking sector.

“Doing so would provide real help to small local businesses and ensure that taxpayers’ funding of the bank delivers lasting value to the real economy.”

As part of EU rules governing its bailout conditions, RBS was told

But the bank also said on Friday that despite “positive discussions” with potential buyers, it will miss the deadline to offload its Williams & Glyn branches by the end of 2017 as per directions from the EU as part of the conditioned of its £45 billion bailout at the height of the 2008 banking crisis.

However, chief executive of RBS, Ross McEwan has said the group may look at “safe” Irish acquisitions again in the coming years after it finally offloads the UK business.

Ross McEwan, head of RBS for the past three years, told analysts that while the group had got “lots to do to clean up” Ulster Bank, he would be “open to” carrying out an acquisition in Ireland at some point.

“We can’t do major acquisitions while we’ve got commitments through our Williams & Glyn unit,” Mr McEwan said.

“We’ve said that the Irish business is attractive. We’re getting it back into shape. At some point, it needs to start growing again safely – can I just say it again: safely? – not like we did last time.”

RBS bought Ulster Bank in 2000 as part of its acquisition of National Westminster Bank, before going on four years later to buy First Active.

Ulster Bank’s assets more than doubled to £70 billion in the four years before boom turned to bust in 2008.

RBS had to inject £15.3 billion into the Irish business to keep it afloat during the crisis.

RBS subsequently shrunk the size of Ulster Bank’s balance sheet through the sale of billions of euro of assets, with the Irish business returning to profit in 2014 as it began to release some of the provisions it had previously set aside for bad loan losses.

However, the pace at which it has been freeing up reserves has slowed down, contributing to a decline in Ulster Bank’s operating profit for the third-quarter months of the year, to £68 million, from £108 million for the same period a year earlier.

Ulster Bank’s new chief executive Gerry Mallon is set to present to major RBS investors on his strategy next month for the first time since he took over in June. Executives from the group’s private banking and RBS International units will also speak at the event.

Mr Mallon told The Irish Times in an interview in August that Ulster Bank was planning, subject to regulatory approval, to hand a £1 billion-plus dividend to RBS and re-establish a regular stream of payments to its parent after years of capital moving in the opposite direction.