George Osborne's 'bad bank" plan for RBS has one big danger Mr Osborne does not appear to agree - admitting he now believes it should probably have been prised in two in 2008 when the Government first bailed it out - and has fired the starting pistol on a review which is likely to come up with only one answer. To help investment bankers on their way to coming up with that answer, Mr Osborne has set out three tests the bad bank must meet for it to be a viable solution. Can it maximise its help for the economy? Will it deliver the best value for taxpayers? Will it accelerate the return to private ownership? Not to pre-judge the process but the answer to all three is likely to be a very firm yes. But what will that mean in reality? It means that floating the "good" part of RBS will be somewhat easier than perhaps Mr Hester thought when he said last weekend it would take up to 10 years to sell off the taxpayers" 81pc stake in its entirety. The sales process will be smoother, with less questionable assets for investors and analysts to pore over and prod.Paradoxically, however, it also means that the good rump of the bank that remains could be somewhat duller and less dynamic as a result. The definition of the bad bank that the Chancellor used was purposefully vague. Although he specifically mentioned Ulster Bank and the commercial property assets, he spoke of a review of a "broad range" of assets. If that were coded language for parts of RBS's investment bank, it would mean that the good bank that remains could be a retail and SME bank focused on the UK economy. Ahead of a general election, that may well be what the Chancellor wants; a Lloyds 2.0 if you will, designed to do Mr Osborne's bidding. But for the banking industry, and on the question of the total return for taxpayers, that may not be the most sensible option. Mr Osborne should be applauded for many things in Wednesday night's speech - not least his signal that the sale of some of the Government's 39pc stake in a revived Lloyds will begin shortly - but when it comes to creating a bad bank, the Chancellor is in danger of creating a very muted Royal Bank of Scotland. Livingston move is a double blow for BT There is little doubt that Ian Livingston has done a remarkable job in turning BT around. When the straight-talking Scot took the helm of the gargantuan telecoms business in 2008, it was a basket case. Its pension deficit was ballooning, staff costs were out of control and poor housekeeping at its global services division was about to drag BT into the red. Five years on from those bleak times, Mr Livingston has retained his air of humility but the picture he presents to shareholders is altogether different. Ongoing cuts have helped to fatten annual profits to £2.5bn, their healthiest level in years; BT's pension deficit has halved and Global Services, while still loss-making, is well on the road to recovery. As BT has steadily improved, Mr Livingston, now 48, has won admirers in the City for his deep knowledge of the operational detail of the company, his leadership abilities and his constant "must try harder" attitude. All of this adds up to good news for UK plc, which is acquiring a dynamic new trade minister at the peak of his powers. However, for BT the timing is less than perfect. A five-year stint as chief executive and the achievement of a successful turnaround, might, ordinarily, mark a good moment for a FTSE 100 leader to exit. Not in this case. It is impossible to deliver a considered verdict on Mr Livingston's stewardship of the company until we see how his spectacular £1bn gamble on sports rights plays out. Only a year has passed since he placed perhaps the biggest bet of his career and made a surprise bid for Premier League football rights so that BT could launch a full-scale television service and tackle its chief rival, BSkyB, head-on. It was a move as bold as it was unexpected. It will radically reshape BT's entire business model. Initially, many investors reacted in horror at his radicalism. They were sceptical that BT had really worked out what to do with the rights, especially when it became clear that Mr Livingston had hoped to win five of the seven packages in which Premier League coverage is sold, instead of the two it secured. Gavin Patterson, chief of BT's consumer business, BT Retail, and the man who will take over from Mr Livingston, was instrumental in designing the strategy but it was Mr Livingston to whom the City turned for reassurance. His calm promise that BT knew what it was doing, that everything was going according to plan, was essential to reeling shareholders back in. News of his untimely exit, little more than a month ahead of the launch of BT's television offering, marks a double blow. Investors will miss Mr Livingston's guiding hand on the tiller and, more than that, they will worry that his departure betrays his own lack of faith in BT's leap into television. Mr Livingston would explain it differently, saying that when the prime minister offers a fourth-generation immigrant the chance to serve his country, it is hard to turn it down, however unexpected and unsolicited the offer. His move into government may be an endorsement of the concept of public service but his departure at this crucial juncture for BT makes for an uncertain legacy.