Ratings agency Fitch has said the costs of splitting Royal Bank of Scotland into a good and bad bank are likely to exceed the benefits.

Fitch said in a statement: "A bad bank split is unlikely as we believe the costs, obstacles and uncertainties involved in transferring some assets to a state-run bad bank would exceed the benefits, in particular to the UK government as majority shareholder in the bank and potential acquirer of assets from the bank."

"RBS’s solid half-year earnings, based on an increasingly robust balance sheet, are likely to reduce the benefit of implementing a bad bank split, as currently being considered by the UK government," Fitch said.

In June 2013, UK Chancellor George Osborne announced plans to split the group into a good and bad bank citing value for money for the taxpayer, and wanting the banks to be strong supporters of the economy.

Fitch continued: "It’s difficult to imagine a restructuring being sanctioned that would increase risk for bondholders without also reducing value for shareholders — most obviously the U.K. government."

The UK government is the majority stakeholder in RBS, Britain’s second largest bank in assets, having nationalised the bank in 2008.

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