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%).