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RBS to create new internal bad bank to house problem loans

LONDON, Nov 1 (Reuters) - Royal Bank of Scotland said on Friday it would create an internal "bad bank" to manage the run-down of its riskiest assets after the government stopped short of ordering a full break up.

RBS said it would place 38 billion pounds ($61.05 billion) worth of assets into a new 'Capital Resolution Division' next year.

RBS said the internal restructuring would free up between 10 billion pounds and 11 billion pounds of capital, leaving it better placed to lend.