Belfast Telegraph

Wednesday 1 October 2014

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

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.

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