By Emma Rumney and Lawrence White
Britain has sold some of its holding in Royal Bank of Scotland, the bank which it rescued in the 2008 financial crisis, but has taken a loss of more than £2bn (€2.3bn) on the deal.
UK Government Investments sold a 7.7% stake in a placement overnight to institutional investors at 271 pence a share, almost half of what the government paid during its initial and largest capital injection into RBS, which it bailed out for a total of £45.5bn.
“This sale represents a significant step in returning RBS to full private ownership and putting the financial crisis behind us,” said Britain’s chancellor of the exchequer Philip Hammond. The bank’s shares fell over 5%.
Once one of the largest banks in the world by assets, the near collapse of RBS — which also owns Ulster Bank — required Britain’s biggest bailout, leaving the government still holding a large stake nearly a decade later. After the latest sale, its holding is 62.4%.
Britain’s opposition Labour party criticised the share sale, saying that taxpayers would lose out and the government should have held out for more.
Jefferies analyst Joseph Dickerson said the sale marked a step towards longer-term investment value in RBS, which has not paid a dividend for a decade.
RBS chief executive Ross McEwan said the UK government’s decision reflected the progress RBS had made in becoming simpler and safer.
“This is an important moment for RBS,” Mr McEwan, who has presided over the bank’s turnaround since 2013 and a series of key milestones in recent months, said in a statement.
Under former chief executive Fred Goodwin, RBS expanded rapidly from a small Scottish bank to become a global financial services group.
Few argue that Britain’s Labour government of the time erred in rescuing the lender, but the years since have been marked by relentless restructuring and billions of dollars in fines to settle misconduct disputes which have hit the bank’s recovery efforts and the chances of returning taxpayers’ money.
A 2015 Rothschild report commissioned by former chancellor George Osborne found that £107.6bn in crisis-era bailouts, including funds injected into Lloyds Banking Group and failed lender Northern Rock, would bring a £14.3bn return for the UK taxpayer.