Sky News reports that City bankers and investors have been primed to expect a disposal of part of taxpayers’ 70.5% shareholders, potentially as soon as this week.
It would possibly be timed to coincide with Wednesday’s annual general meeting in Edinburgh when th bank is expected to be in more bullish mood following the provisional settlement of a big US legal case.
News of a share sale was tempered by a cautious reaction in the City where analysts said the government would be anxious not to be seen as short-changing the taxpayer.
One City analyst suggested that a disposal could target proceeds of more than £3bn, equating to a roughly 10% stake in RBS.
If such a transaction was to take place, it would reduce taxpayers’ interest in the Edinburgh-based lender to roughly 60%.
A fund manager at a major institutional investor said the City had been “awash with speculation” in recent days that an announcement from the Treasury was imminent, according to Sky.
RBS reached a long-awaited $4.9bn (£3.6bn) settlement with the US Department of Justice (DoJ) this month relating to the mis-selling of mortgage bonds before the financial crisis.
UKGI has already indicated it would sell a £3bn stake in RBS during this financial year – with projections for a further £12bn of disposals during the next four fiscal years.
One headache for Mr Hammond will be that a share sale at this juncture would be at well below the 330p price at which his predecessor, George Osborne, offloaded a 5.4% stake in RBS in August 2015.
Shares in the bank closed at 289.7p on Friday, giving RBS a market capitalisation of £34.8bn and making the taxpayer’s stake worth just under £24.5bn.
RBS was rescued from collapse with capital injections from the Treasury totalling £45.5bn at an average share price of 502p.
Several investment banks and law firms have been lined up to work on the privatisation of RBS, with Rothschild holding a role as the Treasury’s capital markets adviser in the process.