Government starts RBS share sell-off

UK Financial Investments, the body that holds the government’s RBS stake, said it would sell about 600 million shares, representing 5.2 per cent of the bank, in a quick-fire sale to institutional investors after the market closed.

The government has a 79% stake in RBS, which it acquired seven years ago when it was saved with a £45.5 billion bailout.

The chancellor, George Osborne, said, “It is fantastic news that we’ve sold more shares in Lloyds Bank, taking the total recovered to nearly £14bn”.

A year on, and despite the price fall, I still think RBS shares are overpriced.

A report from investment bank Rothschild has suggested that the sell-off of the Government’s stake in RBS could cause taxpayers to lose around £7billion.

He pointed to advice from Bank of England governor Mark Carney that delaying the sale would pose a risk to the taxpayer while going ahead would “promote financial stability, a more competitive banking sector, and the interests of the wider economy”.

“The Treasury won’t be able to get the RBS disposal programme done without retail and if you’re going to sell RBS shares to retail in the future it would be nice to have a successful transaction concluded where retail participated and felt good about it”, one source said.

That would see the stock market informed shortly after the close, or around 4.35pm, that UKFI was seeking to dispose of a stake in RBS, which is headed by chief executive Ross McEwan, and had appointed a syndicate of banks to do so through a so-called accelerated book-building process.

All sales are used to reduce the national debt, and the Government’s holding now sits just below 14 per cent.

The UK government could kick-start the sell-off of its 79 per cent stake in rescued lender RBS within the next two weeks, and potentially as early as today, according to press reports. This will be the only sale of shares for at least three months, said UKFI, without specific permission from those brokers running the sale.

Shareholders in Britain’s Lloyds Banking Group are calling on the government to rethink plans to sell down its stake in the lender to ensure taxpayers get the best deal.

The British treasury through the UK Financial Investments now holds about 79-per cent in RBS which it bought at a price of 500 pence a share. Once it’s complete we’ll know what price the Treasury received for the shares.