During the 2008 global financial crisis, the British government rescued RBS from a collapse, giving it £45.5 billion in exchange for a controlling stake.
But the sale was more about starting the process of returning RBS to the private sector and showing investors the government is reducing its interference in the bank, rather than avoiding a loss, people familiar with the decision told Reuters. The sale marks a milestone in Britain’s recovery from the 2007/09 financial crisis and attempt to return RBS and Lloyds Banking Group to the private sector.The government will make a loss on the first sale. “Bank of England Governor says selling now is in “interests of the wider economy”.
“While the easiest thing to do would be to duck the hard decisions and leave RBS in state hands; the right thing to do for the economy and for taxpayers is to start selling off our stake”, he said.
SNP economy spokesman and depute leader Stewart Hosie said while he welcomed the RSB moving from Government ownership back into the private sector but insisted it should not be on the cheap.
“George Osborne needs to be open and honest about his plans for the rest of the stock in RBS as we look forward”.
But he said it was unlikely the Government would ever have recouped all of its money back for bailing out RBS.
The Institute of Economic Affairs (IEA) agreed the Government would have gained little by holding on to shares.
RBS was briefly the world’s biggest bank by assets, but has more than halved its assets and the size of its investment bank and sold businesses around the world.
Baldwin added that about 75 percent of the government’s stake would be sold over the course of the parliament. The £2.1 ($3.3) billion raised will be used to settle the national debt.
RBS CEO Ross McEwan said he was pleased the sell-down had begun, which he said reflected the progress the bank had made “to become a stronger, simpler and fairer bank”.
“There is more work to be done but we’re determined to build a bank the country can be proud of”. During the last seven years, it had been operating unprofitably.
RBS shares fell 1.3% Monday to 337.6p, but it’s been reported that so-called bookrunners – Citigroup, Goldman Sachs, Morgan Stanley and UBS – will get the placing away at 325-330p.
The 170 pence difference represents a loss to the taxpayer of just over £1 billion.
The government’s stake is now valued at 31.2 billion pounds.
He justified this by including revenues from sales in Lloyds, Northern Rock and the mortgage arm of Bradford & Bingley, which also required taxpayer bailouts.
