Chancellor braces for multi-billion RBS sell-off hit

UK chancellor Philip Hammond has hinted that the Treasury could finally be about to take a multi-billion-pound haircut and sell off its 73 per cent stake in Royal Bank of Scotland nearly a decade after rescuing it at a cost of £45 billion to the UK taxpayer.

Mr Hammond told MPs that that “we have to live in the real world”, as he indicated that the remaining shares could be sold below the 502p average price that was paid for them during 2008 and 2009 when it bailed out the Edinburgh-based bank.

RBS has reported nine consecutive annual losses since its rescue by the taxpayer having been plagued by the punitive costs of various misconduct scandals.

Its share are still languishing at about 224p.

Mr Hammond’s latest statements are the first time he has acknowledged that the shares are likely to be sold at a loss to the taxpayer, although Hammond’s predecessor George Osborne sold off a 5 per cent stake in 2015 at 330p a share – a £1bn loss.

Mr Hammond said: “The government is not at present actively marketing its stake in RBS. Our policy remains to return the bank to private hands as soon as we can achieve fair value for the shares, recognising that fair value could well be below what the previous government paid for them.

“We have to live in the real world and make decisions on the future of our holding in RBS in the best interests of taxpayers.”

He has previously described the stake as a long-term asset and any further sell-off as being hindered by the uncertainty surrounding selling off 300 branches as mandated by the EU and a fine by the US for mortgage bond mis-selling in the run-up to the financial crisis.

In contrast, according to reports, the Treasury is set to recoup its remaining stake in Lloyds Banking Group and return the bank it also rescued at the height of the financial crisis to private ownership at a profit.

The Financial Times has reported that the UK Government is expected to offload a tranche of 1.4bn shares to sell out of Lloyds completely by the end of May.

The Treasury has a stake of less than 2 per cent in the bank. To date £20bn has been returned to taxpayers as the Government has continued to sell down its investment in the bank following the financial crisis.

The Office for Budget Responsibility has estimated that based on the bank’s share price in February, the Government would make a £100m profit from the sale.