Chancellor sells RBS shares at loss
Chancellor George Osborne has announced the sale of a 5.4 % government stake in the Royal Bank of Scotland as the first step towards its re-privatisation. The transaction has raised £2.1 billion, which the treasury says it will use to reduce the national debt.
Seven years ago, during the height of the financial crisis, the British government bailed RBS out by purchasing 78% of it. The recent sale brings the government’s stake down to 73.2%. The UK treasury views the sale as a positive action, with the chancellor issuing the following statement on the morning of Tuesday 4th August 2015:
“Now is the time for RBS to rebuild itself as a commercial bank, no longer reliant on the state, but serving the working people of Britain.”
However, onlookers have questioned the deal. The price paid for each share on average during the bailout was 502p, but for the 630 million shares sold this time the price was, on average, just 330p. This has led shadow chancellor Chris Leslie to describe the selloff as a ‘fire sale.’
There has been criticism from the City of London too, with banking analyst Ian Gordon stating he was ‘perplexed’ by the timing of the sale.
and arguably sold the taxpayer short”
The overall loss to the treasury is £1.1 billion. Although beginning the process of re- privatisation is thought of by many as a way of bringing strength and stability to the bank, the bank has thus far struggled to make a profit – declaring a loss of £153 million for the first half of 2015.
Part of the reason for this is the cost of compensating mis-sold PPI – £459m in the second quarter of 2015 alone.
If you think you have been mis-sold PPI, or if you have concerns about another financial product, our Financial Miss-Selling Department is here to help. For further information and specialist advice, call Hampson Hughes Solicitors on 0800 888 6888 or email [email protected]