RBS shares raise £2.1bn at £1bn loss for the taxpayer

Although Britain raised $3.3 billion (£2.1 billion) through the overnight sale of shares, critics have said that the government’s decision to sell the shares for a third less than what the taxpayer paid for them on average has ultimately ripped off the public.

Royal Bank of Scotland last night reached a major milestone on the road back to normality as the Government started selling its stake in the bailed-out lender.

The Royal Bank of Scotland Group plc (LON:RBS) provides financial products to personal, commercial, corporate and institutional customers.

The UK government has offloaded 630mln shares in Royal Bank of Scotland (LON:RBS), raising £2.1bn.

He said the sale will help “promote financial stability, lead to a more competitive banking sector, and support the interests of the wider economy”.

“Waiting for the share price to rise will further postpone a process that should have started long ago”. The government has sold the shares at the market price and selling something at the market price isn’t a loss.

A bevy of investment banks including Citigroup, Goldman Sachs, Morgan Stanley and UBS are acting as bookrunners, responsible for placing the shares with investors.

Shadow Treasury minister Barbara Keeley laid into the Chancellor after speculation the shares were being traded at 330p each – a 34 per cent reduction in the 500p paid per share by Labour in 2008. If the remaining stake were sold at yesterday’s price, then the state would make a face value loss of £16bn.

The complaints are similar to the hamfisted attacks on former Chancellor Gordon Brown for selling a large holding of gold owned by the government at a price that we only knew was low in hindsight.

It is also the case that RBS shares were trading above 400p as recently as February; it doesn’t take a conspiracy theorist to conclude that a loss-making sale less than three months before the General Election would have been far more politically toxic for Mr Osborne.

The move would follow the stake-sale of Lloyds Banking Group, another lending major rescued by a £21-billion bailout by the government. “RBS had to be bailed out urgently, but it doesn’t have to be sold off at the same speed”, he said. 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.

“There is more work to be done but we’re determined to build a bank the country can be proud of”.

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