Chancellor George Osborne has come under fire today following reports that part of the Government’s stake in the Royal Bank of Scotland is being sold off to investors for a £1bn loss.
UK Financial Investors will dispose of some 600 million shares, or 5.2%, it was announced on Monday, bringing the Government’s overall stake in the bank down to 73.2%.
At the height of the 2008 financial crisis, the Government bailed out a tanking RBS for £45.8bn, which equated to 502p per share. On Monday, shares closed at 337.6p, with reported discounts for institutional investors priced at 330p. This costly privatisation sees the taxpayer £1.1bn out of pocket.
However, George Osborne claims the sell-off is the “right thing for the economy.” In addition to paying down Britain’s debts, he added “This is an important first step in returning the bank to private ownership, which is the right thing to do for the taxpayer and for British businesses.”
The decision has prompted criticism from the Labour Shadow Chancellor Chris Leslie, who warns of a “fire sale.” However, Osborne made it clear in his Mansion House speech in June that he would waste no time disposing of shares, with an aim to sell-off at least three quarters of the stake before the 2020 election.
By Trudie Carter