Britain takes £2 billion loss on RBS share sale

LONDON (Reuters) – Britain has offered a few of its holding in Royal Bank of Scotland (RBS.L), the financial institution which it rescued within the 2008 monetary disaster, however has taken a loss of greater than 2 billion kilos on the deal.

UK Government Investments offered a 7.7 p.c stake in a placement in a single day to institutional traders at 271 pence a share, nearly half of what the government paid throughout its preliminary and largest capital injection into RBS, which it bailed out for a complete of 45.5 billion kilos.

“This sale represents a significant step in returning RBS to full private ownership and putting the financial crisis behind us,” Britain’s Chancellor of the Exchequer Philip Hammond stated.

Once one of many largest banks within the world by property, RBS’s close to collapse required Britain’s largest bailout, leaving the government nonetheless holding a big stake almost a decade later. After the most recent sale its holding is 62.four p.c.

Britain’s opposition Labour get together criticised the share sale when it was introduced late on Monday, saying that taxpayers would lose out and the government ought to have held out for extra.

The financial institution’s shares have been down three.four p.c at 0719 GMT.

Jefferies analyst Joseph Dickerson stated the sale marked a step in direction of longer-term funding worth in RBS, which has not paid a dividend for a decade.


RBS Chief Executive Ross McEwan stated the government’s choice mirrored the progress RBS had made in changing into easier and safer.

“This is an important moment for RBS,” McEwan, who has presided over the financial institution’s turnaround since 2013 and a sequence of key milestones in latest months, stated in a press release.

FILE PHOTO: A Royal Bank of Scotland department in central London, Britain February 21, 2009. REUTERS/Luke MacGregor/File Photo

Under former Chief Executive Fred Goodwin, RBS expanded quickly from a small Scottish financial institution to change into a global monetary providers group.

But a disastrous 2007 bid for Dutch financial institution ABN Amro was sealed simply because the monetary disaster hit, bringing the financial institution to the brink of collapse and forcing the government to step in.

Few argue that Britain’s Labour government of the time erred in rescuing the lender, however the years since have been marked by relentless restructuring and billions of in fines to settle misconduct disputes which have hit the financial institution’s restoration efforts and the possibilities of returning taxpayers’ cash.

A 2015 Rothschild report commissioned by former Chancellor George Osborne found that 107.6 billion kilos in crisis-era bailouts, together with funds injected into Lloyds Banking Group (LLOY.L) and failed lender Northern Rock, would convey a 14.three billion pound return for the taxpayer.

But the report estimated a 7.2 billion pound general loss on the government’s funding into RBS.

Successive governments have additionally confronted criticism for a hands-off strategy to RBS which has been embroiled in a sequence of scandals, together with over its treatment of small companies within the aftermath of the disaster.

The government is ready to promote the remainder of its 62 p.c stake in RBS over the following few years, almost definitely similarly to Monday’s sale though it might supply a number of the shares to the general public.

Monday’s sale resumes a course of the government started in 2015 when it offered a primary tranche of RBS shares – 5.four p.c of its stake – for 330 pence per share, at a 1.1 billion pound loss.

Subsequent gross sales have been placed on maintain pending the settlement of the multi-billion greenback settlement with the U.S. Department of Justice.

Additional reporting by Dasha Afanasieva, modifying by Louise Heavens and Jane Merriman

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