RBS sell-off may be slowed if share sale flops again, warn analysts

INVESTORS who took part in the first Government sale of RBS stock in three years earlier this summer would lose around £125m on their £2.5bn outlay if they were to sell today.

The City is nervously awaiting a further sale of the taxpayers’ remaining 62.4pc stake in the bank, after a poor outing last time round in June.

RBS cheered fund managers on Friday when it announced its first dividend in a decade since its £45bn bailout at the height of the financial crisis. It unveiled a 2p interim dividend after a quarter of solid profits.

However, industry sources warned that a second underwhelming sale of government stock could slow the privatisation of RBS.

“If they want to privatise it quickly they need to get the next one right,” one senior investor said.

The last sale saw the Treasury offload a 7.7pc chunk of the state-controlled lender, at a price of 271p a share, for £2.5bn. This was 10p lower than the previous day’s closing price of 281p, and the stock fell a further 15p on the day to 266p.

RBS shares have fallen further since the sale, despite a 3pc rally on Friday following the dividend news.

The stock finished last week at 258p, which is 5pc down on the 271p level new investors bought in at in June. That would translate to a £125m loss on the £2.5bn of shares bought. Commenting on June’s share sale after the bank’s half-year results on Friday, RBS chief executive Ross Mcewan blamed market volatility for the fall. He said: “They sold £2.5bn worth of stock which is a huge undertaking. I think what then happened afterwards – you saw some quite dramatic changes in the marketplace which brought the stock down.

“But £2.5bn is no small amount to get out into the marketplace, it took a while to absorb it.

“Let’s see what the Government do next, they’ve now got a business that has the intention to pay a dividend which should be helpful and it’s in their hands as to when they sell the next tranche.”

Mr Mcewan said the bank hoped to quickly build the dividend over time to around 40pc of earnings, but warned that a chaotic Brexit could slow the process down.

“We need to take a look at that before making major capital distributions,” he said.

UK Government Investments – which manages the Treasury’s RBS stake – was unavailable for comment.