RBS return to private ownership welcomed

BUSINESS leaders have broadly welcomed the announcement by Chancellor George Osborne that the Royal Bank of Scotland and Lloyds are to be returned to private ownership.

Mr Osborne announced in his annual Mansion House speech the government will sell its 80% stake in RBS, a move which the Governor of the Bank of England Mark Carney said would promote financial stability across the  economy.

RBS has up to 10,000 staff based in the North West, with substantial hubs in Manchester and Bolton.

The phased sell-off comes seven years after the Government bailed out RBS to the tune of £45.5bn in 2008.

The CBI director general John Cridland said: “RBS and Lloyds Banking Group are important players in the UK financial services sector for both businesses and individuals, and their long-term futures are best served in private ownership.
 
“It is a sign of strength for both banks that they are now ready to return to private ownership, and the approach to this should deliver a good result for the taxpayer.”

In making the announcement, Mr Osborne accepted that ultimately the tax-payer will take a fall on the RBS bail-out deal.

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.”

The government paid 500p a share for RBS, compared with the current price of 354.8p.

RBS’s chief executive Ross McEwan said: “I welcome the announcement from the Chancellor and we are pushing ahead with our strategy to build a simpler, stronger, fairer bank that is totally focused on the needs of its customers and centred here in the UK.
 
“When the Government starts selling its shareholding, it will be selling a bank determined to be the best in the country.”

Meanwhile, Rothschild investment bank has said that despite the price difference, taxpayers would make £14bn more than it paid out in bank bail-outs if the sale of bank assets and fees already received are taken into account.

And the Government has confirmed that there will be a retail offer for at least part of its 19% stake in Lloyds Bank within the next 12 months. This is expected to be offered at a discount to the current 87p share price.

Lloyds shares have performed well this year, rising from a January low of 73p to 87p, 20% higher in just a few months.