Government begins process of selling off Royal Bank of Scotland shares
THE UK Government has begun the process of selling off the taxpayers’ share of Royal Bank of Scotland, seven years after the public rescued the bank from collapse with a record bail - out of £45.8 billion.
The sale marks a milestone in the UK’s recovery from the 2008 financial crash and will see shares worth around £2bn sold to institutional investors.
This will reduce the taxpayers’ stake from 78.3 per cent to 73.2 per cent.
The announcement came after the Government confirmed it had sold a further one per cent stake in Lloyds Banking Group, reducing its total holdings from an original 41 per cent stake to just 14 per cent.
Seven years ago, Gordon Brown’s Government paid about £5 a share for its RBS stake. On Monday, the bank’s shares closed at 338p, valuing it at £39bn. If all the shares were sold at such a price, then the public would be facing a loss of around £7bn.
However, UK Financial Investments (UKFI), which holds the shares on behalf of the Treasury, has estimated the share price will rise as the Scottish bank returns to health and more stock is sold to the market. UKFI plans to sell about three-quarters of its RBS holding by 2020.
The Treasury announced that UKFI had advised the Chancellor that it would now be “appropriate” to conduct the first sale of Government-held RBS shares and that George Osborne had agreed and had now “authorised the process to begin”. A spokesman noted how in 2013 the Government had set out its objectives for selling the RBS shares: getting the best value for the taxpayer; maximising support for the economy and restoring them to private ownership.
Chris Leslie, Labour’s shadow chancellor, questioned the “fire sale”. He said: “The Chancellor needs to justify his haste in selling off a chunk of RBS while the bank is still awaiting a US settlement for the mis-selling of sub-prime mortgages.”
He said: “Two years ago, George Osborne said he would only countenance a sale of RBS when ‘the bank is fully able to support our economy and when we get good value’.
Neither of these tests has yet been passed.”
Last week, RBS posted half-year losses of £153 million.
The bank faces further fines for “conduct issues of the past’’ and is braced for settlement costs in Amer ica r el at e d to mor t - gage-backed securities, which have battered many of its rivals in the US over the past couple of years.