Those close to the chancellor are accelerating efforts to prepare for a reprivatisation of taxpayer-funded Royal Bank of Scotland and Lloyds Banking Group before the general election, even if their share prices remain below the levels when they were rescued, according to a report in the Financial Times.
It is understood that Tories close to Geoge Osborne have argued that his Labour forerunner Alistair Darling overpaid for shares in the beleaguerd banks when he bailed them out with some £66bn of state funds.
The report states that by saying the Treasury got a bad deal on the rescues, Osborne hopes to prepare the public for a large loss if privatisation begins before the 2015 election.
The planned sale of RBS and Lloyd was hit with a set-back recently when at the end of April the head of the Treasury unit, Jim O’Neil, who was charged with the role of preparing the sell-off, resigned from his post after only a year in the job as chief executive of UK Financial Investments.
O’Neil’s decision was generally perceived as a vote of no-confidence by the corporate finance specialist to push forward the re-privatisation of the two groups.
UKFI has managed the Government’s 82 per cent stake in RBS and 39 per cent stake in Lloyds since the banks were rescued from collapse five years ago. Last year it sold-off its 100 per cent holding in Northern Rock to Sir Richard Branson’s Virgin Money at a loss.
It was reported that a minister close to the chancellor said this week it is unrealistic to expect the RBS share price to rebound to its 2008 level in the foreseeable future, and the Government may have to sell them at a lower value than what they paid.