Chancellor keen to offload stake
Osborne to begin £2.5 billion Royal Bank of Scotland share sale
The Chancellor is expected to kick-start a sale of Royal Bank of Scotland shares this week at an initial loss. George Osborne will hope that selling a small stake worth about £2.5 billion will stimulate interest and help lift the price.
He may make an announcement as early as Monday.
Mr Osborne has successfully reduced the Treasury’s stake in Lloyds from 43% to below 15% and is determined to dispose of the Treasury’s 79% holding in RBS.
He has been frustrated at the slow progress in restoring the bank to health which has held back a recovery in the shares. He removed chief executive Stephen Hester over differences over how to restructure the bank.
RBS is also facing a number of heavy conduct penalties which are weighing on the shares and were thought to be an obstacle to any sale.
Chief executive Ross McEwan said on Thursday that it was entering a “noisy year” which referred specifically to legal action in the US.
The Labour government poured £45 billion into the bank in 2008-09 as it teetered on the brink of collapse following the disastrous takeover of Dutch bank ABN Amro a year earlier.
Mr Osborne believes there is little merit in waiting to sell the shares now priced at 342p, well below the 502p break even target.
It appears that he has mustered sufficient interest in the City to begin drip-feeding shares into the market in a similar process that was successfully used by the US government to sell its banks back into the private sector.
Each tranche generated an appetite for the stock, enabling it to be sold at a higher price.