Britain begins sale of stake in bailed-out RBS
The United Kingdom’s government has begun selling its majority stake in bailed-out Royal Bank of Scotland (RBS) to reduce state debt and kick-start the lender’s full return to the private sector, Her Majesty’s Treasury said Tuesday.
The government has sold 5.4 percent of RBS for £2.1 billion (US$3.3 billion), a statement said.
Royal Bank of Scotland was rescued with £45.5 billion of public money in 2008 at the height of the global financial crisis.
The world’s biggest bank bailout handed the UK’s government with about 80 percent of the Edinburgh-based lender.
RBS has since reported losses totaling about £50 billion and has axed more than 30,000 jobs, with thousands more reportedly set to follow.
“The Government has today begun the process of selling its shares in the Royal Bank of Scotland. It has sold 5.4 percent of the bank at a price of 330 pence per share,” HM Treasury said Tuesday.
“The £2.1 billion raised from the sale will be used to pay down the national debt.”
But with the state having bailed out RBS at a cost of 500 pence a share, the taxpayer is taking a sizeable hit on the sale.
Chancellor of the Exchequer (finance minister) George Osborne insisted that the move was “an important first step in returning the bank to private ownership, which is the right thing to do for the taxpayer and for British businesses.”
The chancellor said the move would “promote financial stability, lead to a more competitive banking sector, and support the interests of the wider economy.”
Back in February, Royal Bank of Scotland said it would end investment banking in the Middle East and Africa and significantly reduce its presence in Asia and the U.S. after a seventh straight annual loss for 2014.
But it recorded a 27-percent rise in net profits for the second quarter of this year, with the sale of U.S. operations offsetting higher exceptional costs.
A general view of the Royal Bank of Scotland logo outside its headquarters in London, Tuesday, Aug. 4.