Government to sell off RBS stake
Seven years after the global financial crash, the Government is to begin selling off its majority stake in the bailed out Royal Bank of Scotland, Chancellor George Osborne has announced.
Mr Osborne said the "decision point" had been reached after an independent review concluded the losses to the taxpayer would be more than offset by the profits on other bank share sales - including its stake in the Lloyds Banking Group.
The move has been endorsed by Bank of England Governor Mark Carney who warned that delaying the start of the sale could lead to the taxpayer losing even more.
It comes after the then Labour government injected a total of £45.5 billion into RBS - taking a 79% stake in the bank - to prevent its collapse in the wake of the crash of 2008.
In his annual Mansion House speech to the City, Mr Osborne said that the size of the Government's holding meant that the sell-off would take "some years" to complete.
While the complexity meant that the first offering - to take place in the coming months - would be to the financial institutions only, he said future disposals could include ordinary investors.
An independent review by Rothschild advised that if the RBS shares were sold in one go at their price on June 5 the loss to the taxpayer would be an estimated £7.2 billion.
However that compares with an estimated overall profit of more than £14 billion if all the Government's remaining bank shares were sold - as against a forecast loss of £20 to £50 billion at the time of the bail-outs.
Mr Osborne said: "In the coming months we will begin to sell our stake in RBS. It's the right thing to do for British businesses and British taxpayers.
"Yes, we may get a lower price than Labour paid for it. But the longer we wait, the higher the price the whole economy will pay.
"And when you take the banks in total, we're making sure taxpayers get back billions more than they were forced to put in.
"From bailing out the banks to bringing them back from the brink, now is the time for RBS to rebuild itself as a commercial bank no longer reliant on the state, but serving the working people of Britain."
In a letter to the Chancellor, Mr Carney said public ownership of RBS had "largely served its purpose" and that a "phased return" to private ownership would promote financial stability.
"Continued public ownership without a foreseeable end point runs risks including limiting RBS' future strategic options, and continuing the perception that taxpayers bear responsibility for RBS losses," he said.
"In these regards, there could be considerable net costs to taxpayers of further delaying the start of a sale."
In his address, Mr Osborne also outlined how the Government would use its re-negotiation of Britain's EU membership terms to ensure "fairness" for countries like the UK which remained outside the euro while preserving the integrity of the single market.
"We need a settlement that recognises that while the single currency is not for all, the single market and the European Union as a whole must work for all," he said.
"It's in our interests that the euro is a successful, strong currency. So we're prepared to support the eurozone as it undertakes the further integration it needs.
"But in return, we want a settlement between the UK and the eurozone that protects the single market and is stable, fair and lasts."
The sell-off of RBS shares was welcomed by the bank's chief executive Ross McEwan.
"We are pushing ahead with our strategy to build a simpler, stronger, fairer bank that is totally focused on the needs of its customers and centred here in the UK," he said.
"When the Government starts selling its shareholding, it will be selling a bank determined to be the best in the country."
SNP spokesman on the economy, Stewart Hosie said: "George Osborne should have made this announcement to the House of Commons, not at a dinner in London.
"The Chancellor's main concern should be providing a good deal for the public and ensuring taxpayers receive what they are owed."