CHANCELLOR George Osborne yesterday began the process of selling off the state’s 78 per cent share in Edinburgh-based RBS Group at a massive loss to the public purse.
Last night Reuters reported that all the shares had been snapped up at 330p each by City investors, meaning a loss of more than £1 billion for taxpayers.
Osborne had hinted that the start of the sale – to city institutions and not the general public – would be in September, but gave the go-ahead for the sale of the first 5.2 per cent stake yesterday in an announcement that provoked anger from opposition politicians, trade unionists and campaigners alike.
Osborne has decided that there is no chance of regaining all of the £48.5bn the UK Government paid to shore up RBS during the financial crash.
The extent of the losses could be as much as £16bn. RBS shares closed down last night some 4.6p to 337.6p, well below the average price of 502p the government paid in 2008 and 2009.
At the reported sale price of 330p, the government would raise just more than £2bn for the stake it is selling – meaning a loss of more than £1bn which, if it continued for all the share sales, would equate to a loss of up to £16bn.
Shadow Chancellor Chris Leslie said: “The Chancellor will need to justify his haste if he sells off a chunk of RBS before the US settlement and when the market is less liquid.
“Taxpayers want their money back and I just don’t believe this is an impossible objective.
“Why this rush to sell when the share price is so far below that paid at the time of the rescue? RBS had to be bailed out urgently, but it doesn’t have to be sold off at the same speed.”
The official announcement by UK Financial Investments (UKFI), the arm's-length body that holds the Government banking stocks, said the first sale would be of approximately 600 million of the company’s ordinary shares, representing approximately 5.2 per cent of RBS.
As a result of the placing, the overall size of HM Treasury’s economic interest in the capital of the company will be reduced from approximately 78.3 per cent to approximately 73.2 per cent and its holding of ordinary shares in the company will be reduced from around 61.32 per cent to around 52.02 per cent
UKFI and HM Treasury have undertaken not to sell further shares in the company for a period of 90 days following the completion of the placing.
A Treasury spokesman said: “UKFI today advised the Chancellor it would be appropriate to conduct the first sale of the government’s shareholding in the Royal Bank of Scotland.
The Chancellor agrees with that advice and has authorised the process to begin.
“The government set out its objectives for its shareholdings in the banks in the Chancellor’s annual Mansion House speech in June 2013 – getting the best value for the taxpayer, maximising support for the economy and restoring them to private ownership – and as set out in that address, the government will only conclude a sale if these objectives are met.”
Union officials at banking union Unite urged the government to hold on to its stake. Rob MacGregor, Unite national officer for finance, said: “As long as mis-selling remains and the lessons of 2008 are ignored, it is reckless for the Chancellor to sell the public stake and give up the potential for scrutiny and transparency that should come with it.”
Fionn Travers-Smith of the Move your money campaign said: “Flogging off the RBS shares at a massive loss to casino City traders is not just a travesty, its a dereliction of duty from the Chancellor. There is no evidence that returning RBS to the private sector will have any material benefit for the UK taxpayer, and the public has been completely excluded from the debate about what should be done with our stake.
“Osborne talks about RBS serving the working people of Britain, but the only way that will happen is when we convert the bank into one that serves the public interest, not flog it off on the cheap to the people who caused the crisis. We are being robbed of our dues from a bank we already own.”
“They say insanity is doing the same thing twice and expecting different results, yet this is exactly what we are seeing in the UK banking sector."
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