A government sponsored review into the Royal Bank of Scotland recommended the creation of an internal 'bad bank' to receive its problematic loans. This, according to the report, would avoid the break up of the bank where the government owns majority shareholdings. The report was first mentioned in a Sky News report last Saturday.

According to Sky News, UK Finance Minister George Osborne would not seek to dismantle the bank, where taxpayers own 81% with the findings of the review set to be completed by next Friday.

The report comes after Osborne sought investment bank Rothschlld to review if RBS has the capacity to spin off its 'soured assets' into another legal entity. This comes after Osborne said his main priority was sorting out the bank's financial issues. He did assure the public that the option of selling the government's shares is not in the horizon, at least not before the 2015 elections.

The report also recommended to reduce the bank's investment banking operations as well the sale of some of its assets. The report sought to focus on the rehabilitation of the bank, which was bailed out last 2008 at a price tag worth GBP45.5 billion or USD73.7 billion.