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Government loses more than £2bn on RBS stake sale

The government has made a loss of just over £2bn after selling another tranche of shares in Royal Bank of Scotland.

The shares were sold at 271p each, almost half the 502p a share paid in the government’s bailout of RBS a decade ago when it rescued the bank at the height of the financial crisis.

The return was “based on the reality of the situation that RBS is now in”, said Treasury Economic Secretary John Glen.

The taxpayers’ holding in RBS will fall to 62.4% from 70.1% due to the sale.

Mr Glen told the BBC’s Today programme that the bank was in a “much healthier position… and the taxpayer needs to receive some of that money back”.

“I would love it if we could sell the shares at a much higher price. Obviously that is what everyone would like to do, but we need to be realistic and look at the market conditions.”

He said RBS was “a completely different institution to where it was 10 years ago”.

“They’ve gone from operating in 38 countries to nine, their total assets have fallen significantly.”

The government has said it intends to sell £15bn worth of RBS shares by 2023.

‘Significant step’

UK Government Investments, which manages the government’s RBS stake, said the sale had raised £2.5bn.

Labour’s shadow chancellor, John McDonnell, had earlier criticised the government’s sale plans, saying there was “no economic justification” for selling the shares due to the “large loss” to the taxpayer.

But Chancellor Philip Hammond said the sale was “a significant step in returning RBS to full private ownership and putting the financial crisis behind us”.

“The government should not be in the business of owning banks. The proceeds of this sale will go towards reducing our national debt – this is the right thing to do for taxpayers as we build an economy that is fit for the future,” he added.

RBS chief executive Ross McEwan said the sale was “an important moment for RBS”.

“It also reflects the progress we have made in building a much simpler, safer bank that is focussed on delivering for its customers and its shareholders,” he added.

In February, the bank reported an annual profit of £752m – its first for a decade and a sharp turnaround from the £6.95bn loss seen the previous year.

 

bbc.com

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