Treasury announces plans to sell RBS shares

According to Budget documents released this week, Chancellor Philip Hammond is preparing to reprivatise the Royal Bank of Scotland by selling £15bn worth of shares the government picked up when bailing out the lender nearly a decade ago.

The government, which poured £45.5bn into RBS during the 2007-2009 financial crisis, planned to offload £3bn shares in the bank before the end of the 2018-2019 fiscal year, with the remaining shares sold over the coming four years.

Efforts to regain money spent on RBS had been delayed for some time as Westminster waited patiently for the effects of regulatory probes in the US and Brexit at home to boost the firm's share price closer to the 502p per share mark it had paid for it.

At the current share price of 270p, the government was still looking at a several billion-pound loss on its 71% stake in the bank, but a forecast-beating profit in RBS' third quarter did help to lift its shares.

Peter Hahn of the London Institute of Banking and Finance, said "The government bought the shares almost 10 years ago, RBS is a very different bank today, so there is no way it can recoup the money it spent bailing it out."

"This is a realisation from the government it is time to move on," he added.

The Office for Budget Responsibility (OBR) estimated the government's loss to be in the vicinity of £21.8bn.

However, any funds recovered would come as a benefit to Hammond who warned of falling tax revenues during a grim budget statement on Wednesday.

The pause button had been hit on previously planned sale of the RBS shares in the wake of the Brexit vote last June, with the last hurdle in the sale to come in the form of claims made by the US Justice Department that the bank, like many of its competitors, had mis-sold toxic mortgage-backed securities that eventually lead to the GFC.

RBS chief executive Ross McEwan said he expected the case to be settled within the year, but noted that formal talks had not started.

Analysts claimed the case could lead to a fine of as much as $12bn, a sum that would need to be repaid before RBS could be released from its government ownership.

As of 1430 GMT, shares had slipped 0.37% to 270.50p.