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Shares still losing value

Osborne urged to sell RBS at a loss ‘to help boost the bank’

RBS banknoteChancellor George Osborne should look at selling the taxpayers’ stake in Royal Bank of Scotland at a loss, says the outgoing head of the Treasury.

Sir Nick Macpherson, who leaves as permanent secretary, has questioned the wisdom of holding on to the majority of the shares and believes RBS should be put back into private hands, even if it means losing billions that were used to prop it up in 2008.

Sir Nick has told the Financial Times that it would be tricky for the government to sell all of the remaining £19.2 billion stake before the next general election but said re-privatising RBS would boost lending and the economy.

He said: ‘My one experience of running banks is that the longer they stay in the public sector, the greater the likelihood that you will lose value.”

The government retains a 73% stake in the bank.

Mr Osborne has released some shares, selling a 5.2% stake at 330p per share at a loss of £1.1bn, well below the 502p paid by the taxpayer. It was hoped that selling a first tranche at a loss would boost liquidity and demand.

However, the shares have continued to lose value and last night closed at 229.6p, less than half the price pad eight years ago.

The fall in the RBS share price between the March 2015 budget and last November’s autumn statement mean the Office for Budget Responsibility reduced the value of the RBS stake from £34bn to £25bn.

 

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