Treasury wants bailed-out banks off its books
Chancellor ‘to announce sale of RBS’ in Mansion House speech
According to City sources the government wants to capitalise on its election victory by removing the bailed out banks from its books. Today it unveiled plans to sell shares to Lloyds to the public over the next 12 months.
Now the Treasury is turning its attention to Royal Bank. The government hinted shortly after its victory at the polls on 7 May that it would be prepared to sell RBS at a loss.
The Labour government bailed out RBS at a cost of £45 billion to the taxpayer and Lloyds at £20bn. Lloyds shares are trading above the break even price, giving the taxpayer a profit, but RBS continues to trade well below the price paid by the government.
RBS shares closed at 341p tonight, well below the 502p price at which the government rescued the bank after its ill-judged takeover of ABN Amro.
Senior figures at RBS have told Financial Times that the government could launch a share sale in the fourth quarter after the bank completes a settlement with US regulators for mis-selling subprime mortgage securities.
Analysts estimate that the settlement will cost billions of pounds in fines, but their estimates vary wildly, making it hard for the government to start selling RBS shares until the uncertainty is lifted, says the paper.
The bank has made seven consecutive years of losses and having embarked on a radical restructuring of its investmet bank it is not expected to return to a profit until next year at the earliest.
It emerged at the weekend that RBS is being prepared for a sale when the search began for a broker. Mr Osborne said in a recent speech to the CBI that he wanted to “get the government out of the business of owning great chunks of our banking system”.
At its annual meeting on 23 June, RBS will ask shareholders to approve a resolution giving it permission for a related-party transaction, a vital step to prepare for a possible share sale by the government to the public in the next 12 months.