THE body responsible for managing the taxpayer’s stake in struggling banks was today close to appointing a new chief executive.

UK Financial Investments (UKFI) is awaiting final approval from Chancellor Alistair Darling to announce the appointment of senior UBS banker Robin Budenberg, the Financial Times reported.

Mr Budenberg would replace John Kingman, who is seeking a job in the private sector after heading up UKFI since last November.

One of his first jobs is likely to be splitting up nationalised Northern Rock into a ’good’ and ’bad’ bank and arranging a sale.

He will also have the task of managing the Government’s 70% stake in Royal Bank of Scotland and its 43% holding in Lloyds, as well as overseeing the winding-down of Bradford & Bingley’s loan book.

Mr Budenberg, who is said to have beaten former Merrill Lynch banker and current UKFI number two, John Crompton, to the top job, has worked on several Government-related deals including the sale of nuclear power firm British Energy to French giant EDF.

He is also likely to be faced with further strictures from European regulators on the break-up of Royal Bank of Scotland and Lloyds Banking Group as the price of their support from the state.

Following the European Commission’s harsher than expected settlement imposed on Dutch bank ING on Monday - including the splitting up of its banking and insurance arms - there are concerns over the impending judgments on RBS and Lloyds.

The Chancellor and the Governor of the Bank of England have both called for more competition in the banking sector and the sale of the Rock - along with significant sales from RBS and Lloyds - could create three new banks with around 15% of the market.

RBS currently has 2,300 branches in the UK, of which 1,600 are NatWest branded. Speculation has centred on the sale of 312 RBS-branded branches in England and Wales as well as the disposal of parts of its corporate banking system.

Lloyds has around 3,000 branches, with around 1,800 Lloyds TSB branches, 1,100 HBOS outlets and 164 under the Cheltenham & Gloucester brand. The bank reportedly could be forced to sell its C&G branches and around 500 Lloyds TSB branches in Scotland.