Belfast Telegraph

UK Website Of The Year

Taxpayer hit with £30bn loss as shares take nosedive at top banks

By Peter Cripps

Published 08/08/2011

It could take more than a decade for the Government to get its money back following the bank bailouts as increased regulation and eurozone debt fears drive away investors, it’s been claimed.

The taxpayer is now sitting on a £30bn loss on its 83% shareholding in Royal Bank of Scotland and 41% stake in Lloyds Banking Group following last week's stock market rout, according to the Sunday Times.

Senior City sources said new regulations forcing the banks to hoard more of the their money and the threat of more stringent reforms proposed by the Independent Commission on Banking (ICB) have put off investors.

It could take at least a decade for the shares to recover to the level paid by the Government, while some analysts have warned that the ICB's tough line of reform could kill the prospect of a sale altogether.

The ICB has suggested that banks be forced to ring-fence their investment and retail arms with the aim of making them less likely to need bailing out again in the event of another financial crisis.

But the banks have warned that the proposals would limit their profits, making them less attractive to investors.

Banking shares are also suffering amid fears the global economy is heading back into recession, while investors are also wary of lenders' potential exposure to bad debts in struggling eurozone countries such as Greece.

Both banks last week reported heavy losses as they struggled amid the global financial chaos.

“Neither bank has any story to tell investors. There's no reason to buy the shares.”

Last week's stock market rout wiped 21% and 24% from the share price of RBS and Lloyds respectively.

Belfast Telegraph

Your Comments

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting?

Read More

From Belfast Telegraph