The government plans to "fully investigate the overall corporate structure" of Royal Bank of Scotland, including its financial health, if it applies to join Nama this week. However, it believes the bank is unlikely to do so.
RBS, headed by Stephen Hester, was a heavy lender to property developers in Ireland through its Ulster Bank subsidiary; in November, Hester said the bank was considering dumping €7.7bn of loans into Nama. The move was a surprise to the government, though it now believes RBS is unlikely to proceed with that plan.
"The view is that we have taken responsibility for our loans over there and likewise the UK banks should take responsibility for their loans over here," said a source familiar with the government's thinking.
RBS, like several British and Irish banks, used off-balance-sheet special-purpose vehicles during the boom, some of which have racked up substantial losses.