X
    Categories: news

UK government to sell part of stake in RBS, taxpayers to face losses

In a major upheaval causing ripples in the banking sector across the UK, the government of the country has declared that it plans to sell a part of its stake in the Royal Bank of Scotland. The strategic decision is predicted to generate huge losses for the taxpayers over investments of their capital by the UK government in the Bank.

For the record, the UK taxpayers control over 70% of RBS since the British administration invested nearly £45.5 billion in the financial institution post the financial crises of 2008. The government had postponed the plans to sell the stocks for nearly three years. However, recently it seems to have has thought of selling its ownership that can result in the loss of nearly £20 billion for the taxpayers.

It has been speculated that the initial tranche of the stocks may be sold as early as this week. One of the City analysts had commented that the UK government may sell around 10% of its stock – totaling to approximately £3 billion. The UK Government Investments‎ (UKGI), extending the speculation, claims that a further £12bn of disposals are quite plausible during the next four fiscal years.

However, if the government will go ahead with its plans of selling total ownership in the RBS (Royal Bank of Scotland), then it is forecast that taxpayers’ interest in the financial organization will come down to nearly 60%.

Chancellor Philip Hammond emphasized that he wants the RBS to resume the dividend offerings for the investors, thereby helping its stock price to increase that can reduce the loss for the taxpayers. Before 2008, the UK government made huge investments in the RBS, rescuing the bank from probably an insolvency or even a closure.

With the announcement of selling its stake in the RBS, shares of the UK government in the bank closed at nearly 289.7 pence per share last Friday that is far less than 330 p share price at which the last load of the government’s shares were sold in August 2015.

Dhananjay Punekar: