Why Osborne should hold his fire on RBS shares sell-off
AS A dickie-bowed George Osborne details his plans to sell taxpayers’ shares in RBS at the Mansion House tonight, he should expect a few hard stares from some City grandees.
Many of the biggest fund managers in London are part of a major legal action to sue RBS over its disastrous rights issue of 2008.
A spokesman for the litigant group says they are “absolutely not” minded to buy the Government’s shares in the bank until their legal fight is resolved.
You can see why: explaining to your customers that you’re using their money to buy shares in a company which you’re also suing for substantial damages might be somewhat prickly.
The list of litigants includes the fund managers Abbey Life, Aberdeen Asset Management, Axa Investment Managers, Scottish Widows, Clerical Medical and Brandes. Not to mention dozens of pension funds including those of six local councils and Whitbread, Lloyd’s of London, BAE and Boeing.
Legal & General and the Universities Superannuation Scheme have reportedly made clear they too will shun the shares sale due to their legal action.
Put together, these funds represent a sizeable chunk of the would-be RBS shares sale backers.
Given the nature of the High Court, we shouldn’t expect this litigation to be resolved until 2017 at the earliest. Until then, the legal actions of shareholders sit there as yet another risk for would-be buyers of the reprivatised shares.
The Government could price the shares so low that investors, perhaps even the claimants, overcome their squeamishness.
But, as the underpricing of Royal Mail highlighted, that’s no way to treat taxpayer-owned assets.
Another reason to wait, as we did with Lloyds, for RBS’s recovery to be more assured before flogging it.
Mobile suspicions
WITH yet more allegations of journalists’ phone hacking pulled through the courts, I wonder why we’ve not heard more about the potential role of mobile phone giants. An acquaintance in the celebrity world says the Met informed him that he’d been hacked several times. He thought this odd, because he’s IT savvy and regularly changed his PIN to protect high-profile clients. When he told the police this, and his suspicion that only an insider at his mobile company could have fed journalists his PINs, he says he was firmly told that this was not a line of inquiry the Met was interested in.
It’s only a hunch, and I guess his PINs could just as easily have been obtained by reporters blagging the phone companies. But even if that is the case, surely it suggests some pretty lax controls at our mobile networks. Hacking victims could do with some answers.