7.7% more of RBS for sale

PHILIP Hammond has restarted the sale of state-owned shares in the Royal Bank of Scotland.

The Chancellor has authorised the sale to institutional investors of 925 million shares – a 7.7 per cent stake worth about £2.6billion – reducing the taxpayer holding from 70.1 per cent to 62.4 per cent.

It is the first disposal by the Government since 2015, when then Chancellor George Osborne offloaded the first tranche at a loss of about £1billion.

Over £45billion was ploughed into RBS to rescue it during the financial crisis of 2008-2009. The average price paid by the taxpayer was 502p, but after a decade of annual losses amid hefty charges for past misconduct, RBS shares closed at 281p yesterday.

UK Government Investments, which manages the state’s holding in the lender, said: “UKGI today advised the Chancellor it would be appropriate to conduct the second sale of the Government’s shareholding in RBS. The Chancellor has authorised the process to begin.”

UKGI has already described it as an “entirely fair assumption” that it could sell a £3billion stake in RBS during this financial year, with a projection for a further £12billion of disposals during the next four years, representing about twothirds of its stake.

A major hurdle to the bank’s return to private hands was recently removed after RBS agreed a £3.6billion settlement with US regulators over claims it sold toxic mortgage bonds in the run-up to the financial crisis.

RBS outgoing finance chief Ewen Stevenson said last week that European stock market turmoil meant it was not an “optimum” time to sell shares.

Hargreaves Lansdown’s Laith Khalaf said: “The taxpayer’s still going to be significantly out of pocket as the Government sells down its stake.

“Few argue the RBS bailout was necessary to maintain financial stability, but the cost of that intervention is now starting to emerge.

“RBS has cleared obstacles and unblocked the road to reprivatisation. Today’s sale is good for private RBS investors because it is a step towards becoming a normal bank again, though government sales may put downward pressure on the share price near-term.”