Lib Dems back plan for bank shares
Liberal Democrat MPs are backing plans to give away billions of pounds of Government shares in Royal Bank of Scotland and Lloyds Banking Group to the general public.
A radical proposal is being put forward to privatise the part-nationalised banks by handing out most of the State's shareholdings to 45 million people listed on the electoral roll.
City firm Portman Capital, which has been working on the idea since 2009, has won support from the Lib Dem Treasury Parliamentary Committee, chaired by Stephen Williams, MP for Bristol West.
They believe 75% of the publicly-owned shares could be given out with a "floor" price set, so that they could not be sold until they had passed the price paid by the Government when it bailed out the two banks at the height of the financial crisis.
The Government would receive proceeds up to the floor price, with people keeping any gains made above that level.
Portman Capital said the plans would be a cheaper way for the Government to recoup its money - and would allow taxpayers the chance to benefit from future profits and growth in the banks.
The taxpayer owns 83% of RBS and 41% of Lloyds after the Government pumped in around £65.8 billion in 2008. Full year results last month showed Lloyds returned to annual profit in 2010 while RBS significantly narrowed losses as their recovery picks up pace.
In a report for think-tank Centre Forum, Mr Williams said: "This is a golden opportunity to do something radical that will capture the public mood and demonstrate that the banks cannot return to business as usual."
Every adult would receive 1,484 shares in RBS and 456 in Lloyds under the proposals. They would have an account set up with a default option to sell the shares on their behalf within two to three years, although people could opt out and trade the shares themselves.
If for example the floor price was set at 50.5p for RBS and 74p for Lloyds - the average paid by the Government - and their shares rose to 75p and £1.10p, the profit per person would be more than £500.