Britain banks £2.5bn for slice of RBS

LONDON: Britain’s government yesterday said it had sold a small chunk of state-rescued Royal Bank of Scotland for more than £2.5 billion ($3.3 billion, 2.8 billion euros), albeit at a loss. Britain on Monday resumed privatisation of the Royal Bank of Scotland, which at the height of the global financial crisis a decade ago underwent the world’s biggest bailout by taxpayers.

The Conservative government headed by Prime Minister Theresa May has sold a 7.7-percent stake in RBS, leaving it still with a majority holding of 62.4 percent, much of which it plans to offload through to 2023. “Over £2.5 billion worth of government-owned RBS shares were sold last night as part of the government’s policy to return the bank to private ownership,” the Treasury said in a statement.

A total of 925 million shares were each sold for £2.71. However, this was at a total loss of £2.1 billion, with the government having spent about £5.0 per share in a rescue costing the taxpayer £45.5 billion. “If the rest of the government stake is sold at a similar price then the total loss comes to something in the region of £21 billion,” said Michael Hewson, market analyst at CMC Markets UK.

The government noted however that the sale would help to reduce the country’s mountain of debt. “This sale represents a significant step in returning RBS to full private ownership and putting the financial crisis behind us,” finance minister Philip Hammond said in the statement. “The government should not be in the business of owning banks. “The proceeds of this sale will go towards reducing our national debt- this is the right thing to do for taxpayers as we build an economy that is fit for the future,” Hammond said.