RBS Shares Sold At £1bn Loss To Taxpayers

The Government has disposed of roughly 5.4% of its stake in Royal Bank of Scotland (RBS) for £2.1bn - a loss of around £1bn to taxpayers.

Monday's sale of 333,000 shares at 330p each is far short of the average 'in-price' of 502p paid by the Government went it bailed out the bank during the financial crisis.

The taxpayer lost £1.72 on every share sold, resulting in a total loss of £1,084m on its investment in RBS.

Chancellor George Osborne has argued that the bank was never bailed out with the idea of making a profit but was instead bailed out to safeguard the UK's financial security, he is therefore no longer prepared to wait for the shares to recover to what was paid for them.

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City minister Harriet Baldwin defended the share sale, telling Sky News the bailout of RBS was "never an investment in the traditional sense".

"In terms of moving forward, clearly the governor of the Bank of England has advised that for the wider British economy it is really important that we start returning the bank to the private sector," she said.

"This is the start of a long process. As with the shareholding we have been selling in Lloyds over the course of the last few years this is the beginning of a process that will take some time."

The overall size of HM Treasury's economic interest in RBS has been reduced from approximately 78.3% to approximately 72.9%.

Speaking to Sky News on Monday, Chris Leslie, the shadow chancellor, urged the Government not to sell at a loss , arguing it was not "an impossible objective" to recoup the £45bn investment.

"Why this rush to sell when the share price is so far below that paid at the time of the rescue? RBS had to be bailed out urgently, but it doesn’t have to be sold off at the same speed," he said.

Global banks Citigroup, Goldman Sachs, Morgan Stanley and UBS orchestrated the share sale but have each been instructed by UK Financial Investments Limited (UKFI) and HM Treasury not to sell further RBS shares for at least 90 days without prior written consent from a majority of the other selling banks.

In a report Osborne commissioned from Rothschild, the investment bank, his advisers concluded that disposing of the taxpayer's entire stake in the bank would crystallise a £7bn loss if fees paid to the Treasury since 2008 were taken into account.

Speaking at the Treasury Select Committee last month Osborne said: "there is an argument that by starting to sell now you might create more of a market for RBS shares and lift the price, but I am not banking on it".

The Government also announced a further disposal of Lloyds shares on Monday which lowers its stake to 13.99%.

Unlike RBS, the taxpayer would make a £1.9bn profit from its Lloyds intervention assuming it would be able to offload its remaining stake at current market prices.

In early morning trading RBS shares were 0.5% lower at 336p.