George Osborne plans swift post-election sale of RBS stake

RBS building sign

George Osborne plans to sell the government’s holding in Royal Bank of Scotland “as quickly as we can” if he remains chancellor after the election.

The bank is still 79% owned by taxpayers after the government was forced to bail it out to the tune of £45bn in late 2008 and early 2009 to prevent it collapsing.

The business secretary, Vince Cable, wanted to break up RBS in 2012 but was overruled by the chancellor. However, he orchestrated the removal in 2013 of Stephen Hester, who was brought in as chief executive to replace Fred Goodwin in 2008.

RBS has continued to post losses, with the £3.5bn for 2014 bringing the total to £43bn since it was bailed out.

Osborne expressed “regret” for failing to reshape RBS more quickly. “I did what I could to correct it,” he told the Financial Times.

RBS chief executive Ross McEwan said last week that its investment banking operations would be reduced to just 13 countries, compared with 51 in 2009. The move to refocus the bank on Britain will result in thousands of job losses in its offices in Stamford, Connecticut.

The chancellor said reducing the government stake could take years to complete given its size.

“It’s not an exact science, but on some measures it’s bigger than all the privatisations of the 1980s put together,” he said. “Second, I think people want to see they get their money back. The British taxpayer wants to feel they haven’t suffered some enormous loss.

“So there are constraints around it, but it’s certainly something I would want to get moving on in the summer after the election. I would want to see a review on a plan for disposal.”

The government has long intended to reduce its holding in RBS. Osborne said in a speech in January that it was “not good for taxpayer value or for the competitiveness of our banking system to have such a large and complex bank in state hands for too long”.

RBS shares closed at 373.4p on Thursday, still considerably below the 502p they were worth when the government took its stake, so taxpayers are still nursing large losses.

The government would need to sell shares at an average of 455p to recoup its £45bn.

The stake is much bigger than the 41% slice of Lloyds Banking Group the Treasury got in return for pumping in £20bn at the height of the financial crisis. The holding has now been nearly halved following a series of sales, primarily to institutional investors, since September 2013.

Osborne is understood to have ruled out a British Gas-style privatisation process for RBS.

Powered by Guardian.co.ukThis article was written by Chris Johnston, for The Guardian on Thursday 5th March 2015 23.17 Europe/London

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