Wednesday 14 November 2018

Britain ready to pull the trigger on £3bn RBS stake sale

RBS deal. Photo: PA Wire
RBS deal. Photo: PA Wire

Alistair Smout

The UK government could sell a 10pc stake in Royal Bank of Scotland (RBS) as soon as this week, Sky News reported on Monday, citing banking sources.

The British government still holds a 71pc stake in the bank, which is Ulster Bank’s parent, after stepping in with a taxpayer bailout during the financial crisis.

About a third of the £45.5bn (€52.08bn) bailout was for its Irish arm.

Sky reported that bankers expected officials to announce the disposal of a stake worth at least £3bn, but added that any share sale could be delayed by market conditions or ministers’ concerns about value for money for taxpayers.

At Friday’s closing share price of just under 290 pence a share, barely more than half the 502 pence each the government paid for them, the UK stands to lose billions of pounds on the sale.

The British government pumped £45.5bn into RBS in the depths of the financial crisis, and efforts since then to recoup the money have been stymied by the plunge in the bank’s share price, regulatory probes in the United States and Brexit.

In particular, a long-running investigation by the US Department of Justice into the bank’s mis-selling of toxic mortgage-backed securities delayed the share sale.

But RBS agreed a smaller than expected $4.9bn settlement earlier this month, paving the way for a long-awaited return of cash to UK taxpayers.

Britain said in November it would sell £15bn of RBS shares over five years, with £3bn to be sold by the end of the 2018-2019 fiscal year. “We don’t comment on market speculation,” a spokesman for the finance ministry said. A spokesman for RBS declined to comment on the report.

Both RBS and Lloyds were rescued during the 2007-2009 financial crisis. Britain sold its remaining stake in Lloyds last year. (Reuters)

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