Chancellor George Osborne has announced plans to begin the sell-off of the Government’s stake in Royal Bank of Scotland.
In his annual Mansion House speech in London yesterday evening, the Chancellor said sales of the Government’s 80 per cent stake would begin in the coming months.
The process is expected to take years in order to maximise returns, taking in multiple different types of investors, but beginning with institutions.
The decision follows a consultation between the Chancellor, the Bank of England and Rothschild, with all three agreeing that market conditions are right for a sale.
In his speech, the Chancellor said although the RBS share price remains well below the level at which the previous Labour government ploughed cash into the bank, he remains confident taxpayers will get £14bn returns beyond their investment into the UK’s banks overall.
Trading in RBS shares closed at 354.80 on 10 June, having been more than 500p when the Treasury bought its stake in the bank in 2008.
Osborne said: “I was not responsible for the bailout of RBS or the price paid then for shares bought by the taxpayer: but I am responsible for getting the best deal now for the taxpayer and doing whatever I can to support the British economy.
“There is no doubt that starting to sell the government’s stake in RBS is the right thing to do on both counts”
The Chancellor argued that beginning sales now, and gradually releasing government holdings into the market, will increase the desirability of its remaining shares.
He added: “Indeed this independent report confirms that if you take into account all the sales we’ve authorised of our bank assets, and the fees we’ve received – at the current valuations taxpayers can expect to make £14bn more than they paid out.”
Labour shadow chancellor Chris Leslie says taxpayers will be “suspicious” of any “rush to sell” RBS by the Government.
He adds: “When RBS is still restructuring the business, and awaiting a US settlement for the misselling of subprime mortgages, a premature sale poses a risk for taxpayers.
“It is highly dubious for the Chancellor to claim that significant losses on RBS are somehow acceptable because a gain can be made selling Lloyds or other completely separate assets.
“The Chancellor said two years ago that he would only countenance a sale of RBS when the bank is fully able to support our economy and when we get good value. Neither of these tests have yet been passed.”
The Chancellor also used his Mansion House speech to announce plans to set a commitment for UK governments to maintain a budget surplus, with the Office for Budget Responsibility charged with overseeing the project.