Goldman Sachs to advise on RBS and Lloyds sell-off

Goldman Sachs Blink

Goldman Sachs is to play a key role in selling off the taxpayer stakes in Royal Bank of Scotland and Lloyds Banking Group.

The Wall Street bank is replacing US rival JP Morgan in advising UK Financial Investments, the body which looks after the taxpayer stakes in the bailed-out banks.

The appointment may cause controversy. Goldman advised the UK government on the situation at Northern Rock in 2007 before the Newcastle-based lender was nationalised in February 2008. Goldman is also thought to be amongst the bidders for a portfolio of mortgages that Northern Rock is now selling off to help repay its loan to the taxpayer.

Goldman’s appointment follows the announcement by George Osborne that he is to begin selling off the government’s 79% stake in RBS, seven years after the bailout, even though the shares are worth less than the taxpayer paid for them at the time. The stake was valued at £45bn seven years ago but is now worth £32bn, according to analysis by bankers at Rothschild for the Chancellor.

Selling off the entire RBS stake is expected to take years, Osborne has said, but could include an offering to retail investors. In the run up to the general election in May, the Conservatives also pledged to carve out a parcel of the remaining stake in Lloyds to sell to the public at a discount.

RBS is also said to be appointing Bank of America Merrill Lynch as a new corporate broker, a key role for firms in the City as they help facilitate discussions with shareholders.

The Lloyds stake has fallen to below 18% from 43% at the time of the bailout as a result of two sales of blocks of share, and more recently through a strategy to dribble shares into the market.

“I personally think that the dribble-out was a really smart thing to do because it enabled the government to sell without any concerns about inside information,” the Lloyds boss António Horta-Osório said this week.

Powered by Guardian.co.ukThis article was written by Jill Treanor, for theguardian.com on Friday 19th June 2015 17.14 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

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