ROYAL BANK OF SCOTLAND is expected to shrink its investment bank even further after refusing to cave in to pressure to sell its American business.
Sir Mervyn King, the governor of the Bank of England, launched another blistering attack on banks last week, accusing the sector of hiding up to £60bn of bad debts. He is demanding that all banks raise more capital reserves.
City regulators have been pressing RBS to consider a sale of Citizens, its American retail banking business, which could be worth up to £10bn.
RBS, however, has said it cannot find a buyer quickly enough to meet the timetable of the new capital demands. As an alternative, the bank is believed to be examining ways to trim capital-intensive areas of its