The British Chancellor of the Exchequer George Osborne revealed last night that he was to begin the sale of the 80 percent state owned Royal Bank of Scotland.
He made the surprise announcement during his Mansion House speech, a lavish annual event when leading members of business commerce, and the financial world meet.
The Royal Bank of Scotland was one of the banks that had to be saved by the UK government following the global financial crash in 2008.
The cost of the RBS bailout was an eye watering £45.5 billion to the British taxpayer, and came after the bank had accrued the biggest losses in British corporate history.
The sale at this moment in time will be controversial, as the share price is currently way below what the government paid in 2008.
It paid 500p a share for the bank at the time of the bailout — the current share price is 362p. That would incur a loss of around £12 billion to the British taxpayer.
George Osborne is gambling on the share price increasing as confidence grows, and plans to sell the bank off in increments.
Osborne wants a two stage approach to the sale: an inquiry which explores sale options, such as a public retail offer or a sale to large financial institutions, and then the outlining of a timetable. He said:
It’s the right thing to do for British businesses and British taxpayers. Yes, we may get a lower price than that was paid for it – but we will get the best price possible. For the longer we wait, the higher the price the whole economy will pay.
That however is purely speculative. Many feel the sell off is being rushed, and Unite, Britain’s largest union, has criticised George Osborne accusing him of “short-changing the public” and intending to sell the stake at a “knock-down rate to city investors.”
