Chancellor urged to split up RBS Chancellor George Osborne is understood to be facing calls from a high-powered commission of MPs and Lords to split Royal Bank of Scotland into a good bank and a bad bank. A draft copy of a report from the Parliamentary Commission on Banking Standards is believed to have recommended breaking up the taxpayer-backed lender. The draft version of the highly-anticipated report from the commission was sent to its members in the last week and they have until Monday to read it through, with a final report due by the end of the month. The recommendation to split RBS would be awkward for Osborne, given the pressure to start recouping taxpayer cash in the part-nationalised banks before the 2015 election. It is thought the Chancellor and Prime Minister David Cameron are not keen on a break-up of RBS, which could delay returning it to the private sector and may be seen as a second state bailout of the banking giant. RBS itself has claimed it is well on the road to recovery, despite reporting losses of £5.2 billion for 2012, driven by a £390 million settlement for rate-fixing, a £1.1bn provision for mis-selling and IT glitches. Sir Philip Hampton, chairman of the 81 per cent state-owned bank, said on presenting full-year results that the institution's recovery would be "substantially complete" by the middle of 2014, paving the way for its return to the private sector. But outgoing Bank of England governor Sir Mervyn King has also said he believed RBS should be broken up in an attack on the handling of the bank's future in a parliamentary hearing in March. It is believed the commission has been strongly influenced by King's views and sees a break-up as a way of freeing the bank from residual bad debts, which could help it to lend more to businesses and boost the economy. The move is also said to be favoured by the commission as a way of increasing potential investor confidence in the "good" part of the bank and increasing the chance of a successful reprivatisation. The so-called "bad" bank would be held on to by the UK government, avoiding the need for a fire sale of the more toxic assets and allowing them to recover in value. However, the Treasury is reportedly considering the alternative of transferring the group's troubled Ulster Bank operations to the Irish government in an effort to shore up RBS's balance sheet.