RBS: UK Government Announces Shares Sell Off

The chancellor George Osbourne this morning announced plans to begin the sell off of troubled part state owned bank RBS (RBS.L). The UK government provided RBS with a £45.5bn bailout in 2008 taking an 80% stake in the company.

Plans announced this morning for a phased sell off of the governments holding have sparked criticism by Unite the workers union whos members also include bank workers saying the sell off will “short change the public”. Currently the share price of RBS (RBS.L) is around 355p where as the UK government stake was bought at 500p per share.

Although George Osborne countered these claims saying that the sale must be seen as a whole and that a better price would be gained in subsequent share sales as confidence grows. Commenting the chancellor said ”It’s the right thing to do for British businesses and British taxpayers. Yes, we may get a lower price than that was paid for it – but we will get the best price possible. For the longer we wait, the higher the price the whole economy will pay.”

The Chancellor is trying to reassure the public that they will not be short changed and is pinning his hopes on the fact that he thinks the bank will do better when not under state ownership and will eventually make higher profits and pay more tax and support the economy more than it would with the state owning 80%.

The Sell off will take place over the next five years and even if the share price did not move at all during this time the treasury would still receive £32Bln and taking into account the sale of bank assets and fees already received a review by investment bank Rothschild Investments states the taxpayer would still receive £14Bln more than the cost of the bailout.

RBS (RBS.L) share price is trading slightly higher this morning off the back of the news at 360p (+2%).

Vedanta Resource Up after Merger Rumours

Miner Vedanta Resources (VED.L) is boosted this morning after reports emerged of a possible merger of its Indian subsidiary company Vedanta Resources India with Cairn India. According to reports this morning the two companies are in final discussions on the merger which could be completed by next march 2016.

Vedanta Resources (VED.L) said earlier today that “it is committed to maintaining its premium listing on the London Stock Exchange and will make appropriate disclosures as and when required”.

Vedanta Resources (VED.L) holds approximately a 60% stake in Cairn India  already and  the deal could be completed to access further cash and reduce debt with analysts and Societe General bank speculating that the deal could give Vedanta access to approximately $2.7Bln held in net cash at Cairn India.

Commented on the reports Societe General said “If confirmed, today’s media reports would indicate that Vedanta is once again endeavouring to simplify the group’s corporate structure and ease its debt concerns. With Cairn India now also held liable for the disputed capital gains tax on Cairn Energy, this makes resolution of the tax dispute a common cause for both parties. We think that while the Indian tax dispute is ongoing, Vedanta is the only potential acquirer that would still see material value in Cairn Energy’s stake in Cairn India”

Vedanta Resources (VED.L) is trading up around 5% this morning on the back of the reports at 569.50p