LONDON: The government has begun its sell-off of shares in part-nationalised lender Royal Bank of Scotland, raising £2.1bn, a third below the price it paid.
It sold a 5.4% stake at 330p a share, a 7.6p discount closing price.
Chancellor George Osborne is facing criticism for selling the shares at well below the price of about 500p the then Labour government paid for them.
The 170p difference represents a loss of about £1.07bn on the shares sold.
The government’s sale cuts the government’s stake in RBS to 73%.
‘Simpler and fairer’
The UK bailed out RBS in 2008 and 2009 by buying shares for £45bn and supplying it with cheap funds.
Ian Gordon, a banking analyst at Investec, told the BBC’s Today programme: “The taxpayer is being short-changed.”
The shares could have been sold for a higher price in February, when they were changing hands for more than 400p, he said.
However, James Bevan, chief investment officer at money manager CCLA Investment Management, said the loss was “relatively small”.
The point of the UK’s rescue of the bank was to prevent further damage to the economy, rather than to turn a profit on the shares, he told BBC Radio 5 live.
RBS chief executive Ross McEwan said: “I’m pleased the government has started to sell down its stake.
“It’s an important moment and reflects the progress we are making to become a stronger, simpler and fairer bank. There is more work to be done but we’re determined to build a bank the country can be proud of.”
‘Casual’ loss
RBS reported a half-year loss of £153m last week after setting aside more money for repaying customers and potential legal settlements.
However, for the three months to the end of June, the bank posted a profit of £293m.
Harriett Baldwin, Economic Secretary to the Treasury, said Mr Osborne was following Bank of England Governor Mark Carney’s advice that a sale should now commence.
Mr Carney said in June the phased sell-off “would promote financial stability” and benefit the wider economy. As governor, Mr Carney is also chairman of the board of the Financial Policy Committee, which is tasked with protecting the stability of the financial system.
UK Financial Investments (UKFI), the company through which the Treasury owns shares in banks like RBS, “has taken the view that there is a window of opportunity to start this process,” she told the Today programme.
UKFI owns the UK’s stakes in Lloyds Banking Group, RBS, and the remains of the fully-nationalised lenders; Bradford & Bingley and the more-toxic parts of Northern Rock. It is run by a board who manage the investments “commercially” and report to Mr Osborne as chancellor.
