Bri­tain be­gins sale of stake in bailed-out RBS

The China Post - - WORLD BUSINESS -

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.

AP

A gen­eral view of the Royal Bank of Scot­land logo out­side its head­quar­ters in Lon­don, Tues­day, Aug. 4.

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