Chancellor says no RBS sell-off

UK Chancellor Philip Hammond has described the state’s 70 per cent stake in bailed-out Royal Bank of Scotland as a “long-term asset”, dashing any hopes of a sell-off in the near future.

The UK Government has held its stake in the bank since its massive £45 billion rescue of the financial giant at the height of the financial crisis in 2008, at the same time as a similar bail-out was carried out for Lloyds Banking Group.

However, while the treasury has steadily returned its share of Lloyds to private ownership, RBS has been inundated with successive financial penalties as a result of a series of crises and scandals.

Only yesterday, the Edinburgh-based bank announced that it has set aside a further £3.2 billion to meet the costs of the mis-selling of mortgage-backed securities in the US, the total cost of which now stands at £6.7 billion -and may yet be more.

Although some had speculated that this latest provision may represent the light at the end of the tunnel for both bank and taxpayer.

However, the Chancellor downplayed any such tentative expectations by characterising the 73 per cent stake in RBS as a “long-term asset” during a visit to Microsoft’s headquarters in Reading, after RBS published its unscheduled trading update yesterday.

The bank’s shares are trading around the 230p level, below the 502p average price that taxpayers paid during the crisis.

Yesterday’s latest blow to RBS’s balance sheet has also led to renewed calls to dismantle RBS into smaller entities.

John Mann, a member of the Treasury Select Committee, said the bank had to be broken up.

He said: “This latest admission of failure is just another sign RBS in its current form isn’t fit for purpose. The bank’s former management were appalling in their behaviour and conduct and the taxpayers are still paying the price.”