Chancellor accepts 'real world'
RBS may be sold at a loss, says Chancellor
The Treasury bailed out the bank at the height of the financial crisis in 2008 by acquiring a 72% stake for £45 billion at 502p a share.
The shares are now trading at less than half that price with little indication that they will rise substantially any time soon. Mr Hammond told MPs on “We have to live in the real world.”
He added: “Our policy remains to return the bank to private hands as soon as we can achieve fair value for the shares, recognising that fair value could well be below what the previous government paid for them.
“We have to live in the real world and make decisions on the future of our holding in RBS in the best interests of taxpayers.”
Mr Hammond previously said a sale of shares in RBS would not take place until after 2020 but he now appears prepared to cut the taxpayers’ losses.
However, the government is expected to wait until the penalties incurred for past practices are settled.
Mr Hammond added: “We are making real progress in realising our holdings in the banking sector.
“We continue the programme sale of our shareholding in Lloyds, which is now down from 43% to less than 2%, and just last month we sold £12bn worth of Bradford & Bingley mortgages in a highly competitive process.”
In February, RBS posted its ninth consecutive loss. It has racked up losses of more than £50bn since the government bailout.
Chief executive Ross McEwan said in February he expected RBS to return to profit by the end of 2018.
The Government is expected to offload a tranche of 1.4 billion shares to sell out of Lloyds completely by the end of May.
The Treasury has a stake of less than 2% in the bank and so far £20bn has been returned to taxpayers.
The Office for Budget Responsibility has estimated that based on the bank’s share price in February, the Government would make a £100m profit from the sale.
Investec analyst Ian Gordon said: “The sell-off is symbolic, rather than a transformational change.”
He adds: “You could almost argue that Lloyds is returning to what it was a little over a decade ago: a high-yielding low-growth stock.”