Head of agency managing Britain's RBS stake sale to quit -source

By Emma Rumney and Lawrence White

LONDON (Reuters) - The head of a British government agency in charge of selling the country's stake in bailed-out bank Royal Bank of Scotland (RBS.L) is to quit his job soon, a source familiar with the matter told Reuters on Thursday.

Oliver Holbourn, Chief Executive of UK Financial Investments (UKFI), will leave as the agency prepares next week to be folded into UK Government Investments which manages overall government asset sales.

Holbourn did not answer calls to his mobile phone seeking comment.

Former Bank of America Merrill Lynch (BAC.N) investment banker Holbourn has since joining UKFI in 2013 overseen the government's attempts to sell shares in the two banks, RBS and Lloyds Banking Group (LLOY.L), that were rescued during the 2008-9 financial crisis.

While Lloyds last May said the government had sold its last remaining stake, RBS remains more than 70 percent owned by the government partly because of a long-running spat with U.S. authorities over mortgage mis-selling allegations that is delaying the sale of its shares.

RBS Chief Executive Ross McEwan said on Tuesday he still did not know when the bank expects to settle U.S. Justice Department allegations that it mis-sold toxic mortgage backed securities in the run up to the financial crisis.

Britain's independent budget watchdog said last November the government could begin selling $15 billion worth of RBS shares before the end of the 2018-19 fiscal year. But McEwan, investors and analysts all see settling the U.S. case as a vital prerequisite for the sale to go ahead.

(Editing by Jane Merriman)