Royal Bank of Scotland sale raises $3.3 billion

Yet their collective endorsement does little to disguise the bald facts of Tuesday morning’s share sale: the taxpayer has lost more than £1bn on the sale of a 5.4% stake in RBS to institutional investors.

UK Financial Investments Limited or “UKFI” said Monday that it plans to sell part of HM Treasury’s shareholding in The Royal Bank of Scotland Group plc (RBS,RBS.L).

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

Chancellor George Osborne said the £2.1 billion would be used to pay down Britain’s national debt.

Mr Osborne said that the move will promote financial stability, lead to a more competitive banking sector and support the interests of the wider economy.

The buyers who plan to wait for RBS’s value to increase could be in for a long ride; the bank is still going through a painful restructuring, and the sins of the past will continue to haunt it for some time.

During the financial crisis, the government bought a 41% stake in Lloyds worth around £20.5 billion.

Britain has sold down its stake in Lloyds at a profit over the past two years and now holds less than 14 percent.

Last week, RBS registered a loss of £153 million for the first half to the end of June after keeping provisions for potential legal issues. More to the point, that’s a full 172p (34.3%) below the price that the Labour government paid when bailing out the bank for £46bn in 2008-9.

Shares were sold at a price of 330 pence each, a bookrunner on the deal said.

The sale is being handled by Citigroup, Goldman Sachs, Morgan Stanley and UBS.

In a statement, Mr Corbyn said: “It’s a disgrace that Osborne is selling off RBS shares tonight at a sizeable loss to the taxpayer”. That could be because you paid over the market price back then (which, given the state of the bank at that time, is very definitely true) or that the market price has changed in the interim but selling at today’s price isn’t a loss against today’s price. Nobody thinks that RBS can ever regain its former glory, but the halting progress it has made on refashioning itself as a “stronger, simpler, fairer bank”, in CEO Ross McEwan’s words, has been disappointing.

Leslie also criticized the timing of the sale, which comes amid fears the bank could be fined by as much as $12 billion (£8 billion) by US authorities for the manner in which it sold mortgage bonds before the financial crisis.

UKFI and the Treasury said they would not sell any more RBS shares for 90 days after the sale without the consent of the bookrunners.