Her Majesty, the Vulture Investor

So this morning's FT tells us that Royal Bank of Scotland is in hot water for allegedly playing hardball with its borrowers, in the hopes of acquiring some of their assets on the cheap. That is RBS has adopted something of a "loan to own" strategy.

That would be perfectly dull news if RBS were a distressed investing fund. And while banks continue to talk about client "relationships" we might not be too surprised if they – through a special arm of the bank, of course – did the same thing. 

The trick in this instance is that RBS is largely owned by the UK government since its bailout. And unlike the larger US firms, RBS does not look likely to get out from government ownership anytime soon.

The government criticizing its own portfolio company then does have a certain element of naval gazing. 

And it leaves the real question of what the plan is.  Does the UK government want RBS to act like a cutthroat, nasty old private bank? Or does it want it to be kinder, gentler?