Government mulls rapid sale of half its RBS stake

THE UK government is reported to be weighing up the sale of 50 per cent of its holding in Royal Bank of Scotland within two years of a possible first sell-down in September.

Citing “people with knowledge of government thinking”, a report yesterday said the £16 billion sale being considered would be at a faster rate than financial markets expect and potentially lead to substantial losses for the taxpayer.

Sources said that final decisions on the sale process had yet to be made and progress would depend upon RBS’S performance, continuing regulatory probes into past misconduct by the bank, and stock market conditions.

Royal Bank of Scotland and UK Financial Investments, the semi-quango that monitors the taxpayers’ holdings in bailed-out banks, both declined to comment yesterday.

However, one City banking analyst said: “I think the crucial thing here is nobody is saying publicly that any final decisions have been made on the shape and timetable of any RBS sale.

“Look at Lloyds [also partly owned by the taxpayer after a £20bn bailout in the financial crash], for instance. The first tranche sold of the state’s holding in Lloyds was worth £3.5bn. Six months later there was another £3bn. And it was in a much better financial shape than RBS is.”

Chancellor George Osborne said last month that he wanted to start selling down the stake in RBS in the coming months after the £45bn state bailout of the bank in 2008, even if it meant the taxpayer took a loss on the sale of shares.

RBS’S shares closed down 12.8p, or 3.6 per cent, at 346.5p yesterday, compared with a taxpayer buy-in price of up to 500p. Former RBS boss Stephen Hester has said that a return to private hands could take a decade.