Sir Philip Hampton said the results released by Royal Bank of Scotland last week were like “groundhog day”.
The bank’s outgoing chairman was referring to the fact that decent growth in operating profits was wiped out by a string of charges for past misdeeds. It also feels like groundhog day for watchers of Britain’s bailed-out financial institutions: this time two years ago, the City was fixated on the possible timing of the first disposal of government shares in Lloyds Banking Group.
Throughout August 2013, speculation about a sale lingered. It took until mid-September for the announcement to be made. It popped up on dealers’ screens around the City at 4.45pm – just minutes after the stock market closed – to declare that investors would be asked to buy shares overnight in what is known as an “accelerated book build”. By 7am the next day, 6% of the bank’s shares had been sold.
Two years on, the City is playing the same waiting game for RBS. In an echo of what happened with Lloyds, last week’s half-year results from RBS clear the decks for a share sale. RBS certainly puffed up its legal disclosures, with lots more information about potential penalties for the way it sold mortgage bonds in the US before the crisis, as well as warnings about an investigation into its treatment of distressed businesses in the UK. And then it tempered expectations of when it can pay a dividend: no chance in 2016, first quarter of 2017 at the earliest. This is the type of information that prospective City investors need before they decide whether to buy shares.
George Osborne may well try to entice investors to gobble up a few this week, before pension fund managers embark on their annual summer getaway. That would be a relief to Hampton, who bows out at the start of September after a gruelling stint in one of the highest-profile roles in present-day corporate life. But really, the chancellor ought to wait. Taxpayers have owned the stake for nearly seven years. What’s the hurry?
This article was written by Observer, for theguardian.com on Sunday 2nd August 2015 10.22 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010