If Royal Bank of Scotland or Lloyds Banking Group get divided then it would affect their value, the man who monitors the tax-payer’s stake in the bank has warned.

Sir David Cooksey, UK Financial Investments chairman told MPs that the kind of thing that would clearly make a difference to the worth of, for instance the Royal Bank of Scotland is whether there lies a demand to split it into separate commercial banks and investment banks or, in the case of Lloyds, to reverse the transaction where HBOS was bought.

The Independent Commission on Banking will be making its first report on competition in the sector in the month of April.

Sir John Vickers, its chairman confirmed in the weekend that it is looking at the break-up of banks, for which RBS’s and Lloyds’s share prices took a plunge on Monday.

It was disclosed in this week that Sir George Mathewson, the former RBS chief told the commission that his former bank should be divided for creating a Scottish-focused bank and Bank of Scotland should be separated from the Lloyds Banking Group. The chief executive of the Office of Fair Trading, John Fingleton, in the last week had stated that it needs to be considered whether Lloyds and RBS should be divided. Office of Fair Trading, advised against the takeover of Edinburgh-based HBOS by Lloyds TSB.

Sir David told MPs on the Treasury committee that he thinks that the response of the markets on Monday was one of on going uncertainty.

He further said that compelling banks to split investment and retail commercial banking operations, along the lines of the Glass-Steagall Act in 1930s America, would reduce the taxpayer’s banking stakes value.