Hammond prepares to sell Government’s stake in bank at a loss
PHILIP HAMMOND has admitted that the Government is prepared to sell its stake in Royal Bank of Scotland (RBS) at a loss to the public purse.
The Government bought its 72 per cent stake in the bank for £45bn in 2008, at £5.02 a share, as part of a bailout at the height of the financial crisis.
But shares in the troubled lender are now trading at less than half that price at £2.23. The Chancellor said yesterday: “The Government is not at present actively marketing its stake in RBS.
“Our policy remains to return the bank to private hands as soon as we can achieve fair value for the shares, recognising fair value could well be below what the previous government paid for them.
“We have to live in the real world and make decisions on the future of our holding in RBS in the best interests of taxpayers.”
It is understood that only once RBS’ legacy issues – such as fines in the US and state aid obligations – are dealt with, will the Government begin selling down the taxpayers’ stake.
In February, RBS racked up its ninth consecutive year of annual losses, ending 2016 £7bn in the red and announcing a major costcutting drive expected to result in large-scale job losses.
In addition, the European Commission has launched an indepth probe into Government proposals which aim to spare RBS from being forced to sell off the Williams & Glyn branch network.
Mr Hammond has previously said the Government does not expect to offload its 72 per cent stake in RBS until after 2020.
He added: “We are making real progress in realising our holdings in the banking sector.
“We continue the programme sale of our shareholding in Lloyds, which is now down from 43 per cent to less than two per cent, and just last month we sold £12bn worth of Bradford & Bingley mortgages in a highly competitive process.”
As a consequence of the Government taking a shareholding in the RBS Group following the 2007-08 financial crisis, the group was required by a European Commission ruling to sell a portion of its business.