Carney says uncertainty about RBS' future must end

LONDON (Reuters) - Britain should end uncertainty over long-term plans for state-controlled Royal Bank of Scotland, Bank Governor Mark Carney said in a newspaper interview. Carney also told the Daily Mail it would be "a challenging task" to avoid a new credit or house price bubble but he was ready to head off any risk. The newspaper said he gave what could be seen as a veiled warning to the government over its moves to boost the housing market, saying heading off problems "would be difficult to achieve if there were a host of government policies or other events that are pushing in the other direction." Under the government's Help To Buy scheme, borrowers can buy a home with a deposit of just 5 percent. Carney's position on RBS echoes that of his predecessor, Mervyn King, who said the bank's ability to sustain lending was being hampered by a lack of clarity over its future. Britain's government ploughed 45.8 billion pounds into RBS to save it from collapse in 2008, and now holds an 81 percent stake. Carney told the Daily Mail he would not be drawn on whether he thought RBS should be split into a 'good' bank and a 'bad' bank - something advocated by King and recommended by a parliamentary commission - but made clear the status quo was a damaging one. "It's absolutely imperative that the uncertainty around RBS is dissipated," he told the newspaper. The government will conclude a review this autumn into whether RBS should be split up, while Business Secretary Vince Cable told a newspaper earlier this month the bank was unlikely to be reprivatised before 2018. Carney, who also heads a group of global banking regulators, said the core of the international banking system had been "substantially repaired" but it was still not as strong as it needed to be. He singled out the opaque world of derivatives trading as a particular concern. "We have improved the infrastructure and the transparency in bank reporting," he said. "Where we still need to make a lot of progress is in the derivatives markets, huge markets, multi-trillion markets." Carney said giving British banks the confidence to lend and businesses the confidence to borrow was at the heart of the guidance policy on interest rates he announced earlier this month. Still, he said it was wrong to expect a rapid increase in overall lending. What was needed was an increase in lending to firms that were expanding. "As the recovery progresses, you need to take lending capacity and shift it from existing businesses that aren't going to pick up," he said. Asked whether the Bank would provide more help for the economy in the form of government bond buying, Carney said monetary policy would remain stimulative until British economic growth was self-sustaining. "We are telling you the minimum amount of stimulus that we're going to provide. There could be more if necessary. But there won't be less. We are absolutely clear on that," he said. (Reporting by Christina Fincher and William Schomberg; Editing by John Stonestreet)