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Britain banks œ2.5bn for slice of RBS
LONDON, June 5, 2018 (BSS/AFP) – Britain’s government on Tuesday said it had
sold a small chunk of state-rescued Royal Bank of Scotland for more than œ2.5
billion ($3.3 billion, 2.8 billion euros), albeit at a loss.
Britain on Monday resumed privatisation of the Royal Bank of Scotland, which
at the height of the global financial crisis a decade ago underwent the
world’s biggest bailout by taxpayers.
The Conservative government headed by Prime Minister Theresa May has sold a
7.7-percent stake in RBS, leaving it still with a majority holding of 62.4
percent, much of which it plans to offload through to 2023.
“Over œ2.5 billion worth of government-owned RBS shares were sold last
night as part of the government’s policy to return the bank to private
ownership,” the Treasury said in a statement.
A total of 925 million shares were each sold for œ2.71. However, this was
at a total loss of œ2.1 billion, with the government having spent about œ5.0
per share in a rescue costing the taxpayer œ45.5 billion.
“If the rest of the government stake is sold at a similar price then the
total loss comes to something in the region of œ21 billion,” said Michael
Hewson, market analyst at CMC Markets UK.
The government noted however that the sale would help to reduce the
country’s mountain of debt.
“This sale represents a significant step in returning RBS to full private
ownership and putting the financial crisis behind us,” finance minister
Philip Hammond said in the statement.
“The government should not be in the business of owning banks.
“The proceeds of this sale will go towards reducing our national debt —
this is the right thing to do for taxpayers as we build an economy that is
fit for the future,” Hammond said.
– ‘Time is right’ –
The government had decided in 2015 to start selling a chunk of its stake but
the plan was carried out only partially owing to the lender’s low share
price.
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“I am pleased that the government has decided the time is now right to
restart the share sale process,” said RBS chief executive Ross McEwan.
It “reflects the progress we have made in building a much simpler, safer
bank that is focused on delivering for its customers and its shareholders.”
Since then, the Edinburgh-based lender has posted its first annual bottom-
line profit since 2007 following a huge drop in litigation costs.
RBS was fined $4.9 billion last month by the US Justice Department over its
role in the sub-prime housing crisis but much of the cost had already been
set aside, while the total was less than expected.
“From racking up circa œ50 billion in losses in ten years due in large part
to mega restructuring charges and impairment charges, the bank has turned a
corner,” sid Markets.com analyst Neil Wilson.
Britain is meanwhile aiming to sell two-thirds of its RBS stake for roughly
œ15 billion over a five-year period.
Shares in RBS slid 3.5 percent to 271.20 pence on Tuesday’s news to trade
around the level of the sale price.
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