Voters to be given shares in bailed-out UK banks
Published 23/06/2011 | 05:00
EVERY adult in Britain would receive free shares in the nationalised banks under plans to reward the UK public for helping bail out the City during the financial crisis.
More than 46 million people would be handed the shares in Royal Bank of Scotland and Lloyds Banking Group under the "people's bank" plan devised by Nick Clegg, the British deputy prime minister, currently on a trip to Brazil with Tory cabinet ministers.
The plans propose that ordinary voters would be able to profit from any increase in the value of their shares once the UK treasury has recouped taxpayers' money used for the bailout -- an offer that could eventually be worth up to £1,000 (e1,130) to householders.
Mr Clegg said it was "psychologically immensely important" for people to be given a stake in the banks in the wake of the financial crisis.
"Their money has been used to the tune of billions and billions and billions to keep the British banking system on a life-support system," he said.
He added that Britons were now "condemned to take an interest in what happens in our banking system" because of its size relative to the economy. He said giving them shares represented fair compensation for the financial crisis.
Mr Clegg admitted that the Liberal Democrats had been frustrated by the Conservatives in their attempts to rein in the banks and said he hoped to give the public shareholders a veto over boardroom pay and other issues.
Yesterday, Vince Cable, the Lib Dem business secretary, made another speech attacking "rewards for failure" in the City and expressed outrage at the pay of FTSE-100 chief executives last year.
It is believed the Lib Dems will officially put their proposal for the bank share distribution to the treasury next week. Mr Clegg has already discussed the scheme with British Prime Minister David Cameron, who has given his support for the plan to be discussed.
It is not known how the UK treasury will react to the proposal, which could prove difficult and costly to administer. It had been thought that George Osborne, the Chancellor, was more inclined to keep the profits from any sale of the banks and use them to pay for tax cuts before the next election.
Last week, Mr Osborne announced that Northern Rock, the smallest of the nationalised banks, would be auctioned this year for an estimated £1bn (e1.1bn).
The British taxpayer owns 84pc of RBS and 43pc of Lloyds after the government spent £65.8bn (e74.3bn) buying shares at the height of the financial crisis. The share price of both banks has fallen sharply since.
It is understood that under the plan, the treasury would recoup the value of its investment in the banks before any windfall was redistributed to the public.
The estimated share price, at which taxpayers would be paid back -- and above which they could make a profit -- is 74p for Lloyds shares and 51p for RBS shares. Shares in Lloyds are currently trading at about 47p, and 39p for RBS.
Under Mr Clegg's plan, every British citizen could receive about 1,450 shares in RBS and 440 in Lloyds -- worth about £770 (e870) at current market prices. He is thought to be keen to develop radical popular policies to win back public support. (©Daily Telegraph, London)