Get ready for the great RBS share sale
Taxpayer will flog stake after £4bn fine in US
THE Government’s stake in Royal Bank of Scotland is finally set to be sold after the bailed-out lender was fined £3.6bn by the US for flogging toxic mortgages over a decade ago.
The bill from the US Department of Justice is its last major penalty for bad behaviour around the time of the financial crisis and a key milestone for the bank.
It means it can finally start paying dividends to shareholders again – a relief for its 180,000 small investors. It also clears the way for the Treasury to sell the 70pc stake it acquired when the bank was bailed out with £46bn of taxpayers’ cash in 2008.
chief executive Ross McEwan said: ‘This bank can move forward on one of its largest outstanding issues, but it’s a stark reminder of what happens when you get things wrong.
‘We had a culture that wasn’t focused on customers, it was focused on making money for the bank.’
The £3.6bn DoJ fine is much lower than feared, with some analysts warning it could have been as high as £11bn.
RBS faced repeated delays to the settlement and Donald Trump’s election as President slowed the process down further because he replaced scores of officials in the justice department.
Negotiations began in earnest only after the bank reported its first- quarter results less than a fortnight ago, but they then quickly gathered speed.
RBS held an urgent board meeting late on Wednesday and issued a statement confirming the settlement at midnight. Now the bill is agreed, the British Government is expected to start selling shares back into private hands. RBS was briefly the world’s largest bank before the financial crisis hit, as boss Fred Goodwin sought to build a global empire.
At the time the Treasury took its stake in RBS the stock was bought for 502p per share – but its price is down 43pc since then, meaning the state is likely to lose more than £10bn.
RBS’s latest bill caps years of charges for bad behaviour totalling £20.9bn, and it is likely to sink to another loss this quarter because of this fine.
But the settlement was nonetheless cheered by traders yesterday, with shares up 3.8pc, or 10.4p, to 286.5p.