Another tranche of the state’s share in Royal Bank of Scotland could be sold off as early as this week, with speculation mounting that the Treasury is to resume its privatisation imminently.
About 10% of the bank could be sold to investors, which would raise about £3bn but still crystallise a substantial loss to taxpayers after the government was forced to bail out RBS during the financial crisis in 2008.
While the Treasury’s long-term goal is to sell its 70.5% stake and return the bank to the private sector, the share price could yet defer a decision.
RBS is currently valued about 12% lower than when the then chancellor, George Osborne, sanctioned a controversial sell-off in 2015, although the government is resigned to writing off much of the £45.5bn spent on the bailout, with its remaining stake worth less than £25bn.
UK Government Investments (UKGI), the arms-length company owned by the Treasury that advises on managing its assets, declined to comment.
But according to a report from Sky News, bankers and investors have been primed to expect a further sell-off as soon as this week, with a fund manager at a major institutional investor claiming the City was “awash with speculation” that an announcement was imminent.
Resumption of the government’s share disposal plan has been back on the table since a relatively lenient settlement with the US Department of Justice earlier this month. RBS agreed to pay $4.9bn (£3.7bn) to wind up an investigation into sales of financial products linked to risky mortgages ahead of the financial crisis, less than half the worst-case penalty UKGI had feared.
The chancellor, Philip Hammond, said the agreement paved the way to resume a sell-off, with shares rising sharply on the news. The Office for Budget Responsibility’s forecasts have the government raising £15bn from sales of its stakes over the next five years.
RBS is due to hold its annual general meeting on Wednesday in Edinburgh, buoyed this year by its first annual profit since the crisis, having made £752m in 2017, and promising to resume paying dividends.
However, some shareholders will be agitating for more control over the bank and its executive pay. Anger has been fuelled by a report into the “widespread inappropriate treatment” of small businesses by RBS after the financial crisis, while the bank recently announced plans to close 162 branches with the loss of 800 jobs.
RBS declined to comment.
