The cost of splitting Royal Bank of Scotland into a good bank and a bad bank could outweigh any benefits it might bring, ratings agency Fitch said on Wednesday.

The conclusion reached by Fitch comes as investment bankers at Rothschild conduct an analysis for George Osborne on whether to break up the bailed-out bank, potentially making it easier to pump more credit into the economy and sell off the taxpayer's 81% stake.

The chancellor commissioned the review in June when he also signalled that he was ready to consider selling off the taxpayer stake in Lloyds Banking Group.

Fitch said: "A bad bank split is unlikely as we believe the costs, obstacles and uncertainties involved in transferring some assets to a state-run bad bank would exceed the benefits, in particular to the UK government as majority shareholder in the bank and potential acquirer of assets from the bank."

Rothschild's bankers are considering whether to put "bad" parts of RBS – most likely Ulster Bank, commercial property loans in the UK and some other troubled loans – into a separate bank.

But Fitch said that this might force the bank to crystallise any losses and could be included in the UK's public debt total.