Ulster Bank parent RBS shares sold
The UK government sold a 5.4% stake in RBS at 330p per share, a third below the price paid when Britain rescued the bank with £45.8bn of taxpayer cash at the peak of the financial crisis.
The move raised £2.1bn and is expected to be followed by several more sales.
Overall, the UK government is sitting on a £15bn loss on its holding — based on the current stock price and its average purchase price of 502p.
The UK disposal will be closely watched here too. The Department of Finance is considering the timing of the sale of AIB — with a probable sale of an initial stake in the lender probably pencilled in for next year — soon after the Dáil election.
However, the UK sale was more about starting the process of returning RBS to the private sector and showing investors the government is reducing its interference in the bank — rather than avoiding a loss.
“While the easiest thing to do would be to duck the difficult decisions and leave RBS in state hands, the right thing to do for the economy and for taxpayers is to start selling off our stake,” said chancellor George Osborne.
However, the opposition Labour Party slammed the sale. “RBS had to be bailed out urgently, but it doesn’t have to be sold off at the same speed,” said finance spokesman Chris Leslie.
“The chancellor needs to justify his haste in selling off a chunk of RBS while the bank is still awaiting a US settlement for the mis-selling of sub-prime mortgages,” Leslie added, referring to a potentially massive fine from US authorities, related to RBS’s past sales of US mortgages.
RBS has set aside £2.1bn for a settlement but analysts estimate it could cost as much as £9bn, which has weighed on the stock.
The share sale, which reduces taxpayers’ holding to 72.9% from 78.3%, marks a milestone in Britain’s recovery from the financial crisis.
The move had been on the cards since Osborne in June accelerated the timetable for selling RBS, after his Conservative Party won May’s national election with a surprise majority.
Other benefits of the sale are that it increases liquidity in the stock and shows there is investor appetite, particularly in Britain and the US, which accounted for 85% of demand, one source said.
The 2.3% discount to RBS’s closing price yesterday, at which the shares were sold, was narrower than the 3.1% discount on the first sale of Lloyds shares in September 2013.
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