Privatisation of RBS postponed for yet another year: Treasury still owns 62% of the banking giant
The privatisation of Royal Bank of Scotland has been postponed for yet another year.
The Treasury still owns 62 per cent of the banking giant, following a £45.5billion taxpayer-backed bailout in 2008.
It has been trying to sell its stake ever since, and intended to wash its hands of the bank in the 2023-24 financial year.
The Government intended to wash its hands of RBS in the 2023-24 financial year. But the Chancellor revealed that he was not expecting to offload its shares until at least 2024-25
But Chancellor Rishi Sunak revealed that he was not expecting to offload the Government’s shares until at least 2024-25.
The stake is worth £10.6billion, as each share is valued at 141.6p – almost three-quarters less than the 502p paid in 2008.
The Treasury has booked a £3.2billion loss from selling shares in RBS, after dispensing with 5.4 per cent of the bank in 2015 for 330p and 7.7 per cent in 2018 for 271p.
It has been waiting for the share price to pick up so it can recoup some of the £45.5billion it spent on the bailout.
But RBS’s share price has lingered in the doldrums since the 2008 crash. Its profits have been squeezed as the Bank of England has kept interest rates low, meaning lenders such as RBS have little room to hike the prices of their products.
Competition between banks has increased in the mortgage market, as each races to lend out the most money.
The Office for Budget Responsibility said: ‘Delays and cancellations to asset sales add steadily to debt.’
The independent watchdog now expects the Treasury to sell £3.8billion worth of shares in 2020-21, £3.6billion the following year, £4.2billion in 2022-23 and £3.3billion for the following two years – a total of £18.2billion.
Sunak will be hoping that, under the leadership of new boss Alison Rose, RBS shakes off the tarnished reputation left by former chief executive Fred ‘the Shred’ Goodwin.
In a symbolic move, the bank is planning to change its entire group name to Natwest.
Sunak also revealed he is still planning to sell off the Treasury’s remaining assets in bust banks Bradford & Bingley and Northern Rock this month.