Friday 3 July 2020

UK takes $1.7bn hit in RBS sell-off

LONDON, August 4, 2015

Britain took a £1.1 billion pound ($1.7 billion) loss on its first sale of shares in Royal Bank of Scotland (RBS) on Tuesday, sparking accusations from opposition politicians of an unnecessarily rushed and costly disposal.

The UK government sold a 5.4 per cent stake in RBS at 330 pence per share, a third below the price paid when Britain rescued the British bank with £45.8 billion of taxpayer cash at the peak of the 2007/09 financial crisis.

Britain raised £2.1 billion, but lost a substantial sum on the first of many blocks of shares to be sold. Overall it is currently sitting on a £15 billion loss on its holding.

Finance Minister George Osborne hailed the start of returning RBS to the private sector and said it was right to commence selling at a loss.

"While the easiest thing to do would be to duck the difficult decisions and leave RBS in state hands, the right thing to do for the economy and for taxpayers is to start selling off our stake," Osborne said.

But the opposition Labour Party slammed the sale.

"RBS had to be bailed out urgently, but it doesn't have to be sold off at the same speed," said Chris Leslie, shadow finance minister.

"The Chancellor needs to justify his haste in selling off a chunk of RBS while the bank is still awaiting a US settlement for the mis-selling of sub-prime mortgages," Leslie added, referring to a potentially massive fine from US authorities against RBS, related to past sales of US mortgages.

RBS has set aside £2.1 billion for a settlement but has said the timing of a deal is uncertain. Analysts estimate it could cost as much as £9 billion.

However the share sale, which cuts the taxpayers' holding to 72.9 per cent from 78.3 percent, still marks a milestone in Britain's recovery from the financial crisis, as well as forming a plank in Osborne's strategy to improve the country's finances. - Reuters

Tags: UK | RBS |


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