When was RBS bailed out, what stake does the government own and why are they selling their shares?
THE government has said it plans to sell a 7.7 per cent stake in the Royal Bank of Scotland, equivalent of 925million shares.
The sale is expected to raise £2.6billion. Here's the details.
When was RBS bailed out?
The bank fell into difficulties during the financial crisis in November 2008 and was bailed out by the government to the tune of £45billion to prevent it from collapsing.
The sale, based on the bank’s current value would mean a loss for the government of around £2bn, which paid an average of 502p per share to prop up the bank.
RBS’s bail out was part of a much larger bail out totalling £500bn on October 8, 2008 as a response to the financial crisis.
The aim was to stabilise the banking system.
What stake does the government own?
The government currently has a majority holding in the bank, amounting to 70.1 per cent.
It intends to sell 7.7 per cent of its holding.
After selling, the holding will be reduced to 62.4 per cent.
The government currently holds 8.4billion shares.
RBS shares are currently worth 281.1p, at the close of play on Monday, valuing the bank at £33.8bn.
The disposal will take place this week in a process managed by investment banks Morgan Stanley, Citigroup, Goldman Sachs and JPMorgan, according to UK Government Investments, which manages taxpayers' RBS stake.
The disposal marks the first time RBS shares have been sold since the summer of 2015, when the then Chancellor George Osborne sold the first batch at a loss of about £1bn.
When Osborne sold the shares the share price was 330p.
In September it emerged the Ex-RBS chief Fred Goodwin, who led the Royal Bank of Scotland to the brink of collapse, had pocketed a pension pot "worth £17million".
This sparked outrage given how much money the bank collapse had ended up costing the nation.
That same month RBS announced it was axing 54 branches.
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Why is the government selling its shares?
The government has said it intends to sell £15bn worth of shares by 2023.
Joseph Dickerson, an analyst at Jefferies, told the the size of the sale was slightly lower than many investors had expected, but said “nevertheless it’s a step in the right direction, and another milestone for the bank”.
In May, 2018, RBS announced it was closing 162 branches in England and Wales.
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