Reprivatisation of RBS bank 'unrealistic' in next five years - UK minister

By Costas Pitas

LONDON (Reuters) - Britain's largely state-owned Royal Bank of Scotland is unlikely to be reprivatised before 2018, Business Secretary Vince Cable said in an interview published on The Telegraph newspaper website on Saturday.

"I don't think it would be sensible for the government to set a rigid timetable, but given where we start from, I think it is pretty unrealistic to think of RBS going back into private ownership this parliament or probably within five years," Cable said.

Britain is expected to go to the polls in 2015, with seemingly different views between the governing coalition partners as to how quickly the government should part with its 82-percent stake in the bank.

Conservative Prime Minister David Cameron has spoken in favour of a speedy restructuring and said during a business trip to India in February that he was keen to return RBS to private ownership as soon as possible.

Cable, a senior lawmaker in the junior coalition Liberal Democrat Party, appeared to suggest that it will take longer to return the bank to private hands, and that it could be broken up.

"I think there is a very strong argument for saying that the bank got too big and indeed that was the source of its undoing," Cable said.

"But we are having to balance the benefits of breaking up the bank (and) the potential benefits for competition (with) the significant costs."

On Thursday, Reuters reported that it could take until the end of next month before the bank decides how to sell more than 300 of its UK branches, a condition of the 2008 taxpayer bailout it received.

Asked if the Royal Bank of Scotland would be better as a UK-focused retail and corporate bank, Cable said:

"We (I and Finance Minister George Osborne) are not nationalists and of course there is an argument for international banking."

"But we do need to have strong UK banks, particularly supporting our business community. At the moment that market does not function well."

(Reporting By Costas Pitas; Editing by Sandra Maler)