Philip Hammond has signalled that the government is facing a multibillion-pound loss from selling off its 73% stake in Royal Bank of Scotland.
The chancellor told MPs that that “we have to live in the real world”, as he indicated that the remaining shares could be sold below the 502p average price that was paid for them during 2008 and 2009 when £45bn of taxpayers’ money was pumped into the Edinburgh-based bank.
Shares in the bank – which has reported nine consecutive annual losses since its rescue by the taxpayer – are trading at about 224p. This is the first time Hammond has acknowledged that the shares are likely to be sold at a loss to the taxpayer, although Hammond’s predecessor George Osborne sold off a 5% stake in 2015 at 330p a share – a £1bn loss.
Hammond said: “The government is not at present actively marketing its stake in RBS. Our policy remains to return the bank to private hands as soon as we can achieve fair value for the shares, recognising that fair value could well be below what the previous government paid for them.
“We have to live in the real world and make decisions on the future of our holding in RBS in the best interests of taxpayers.”
He has previously described the stake as a long-term asset and any further sell-off as being hindered by the uncertainty surrounding selling off 300 branches as mandated by the EU and a fine by the US for mortgage bond mis-selling in the run-up to the financial crisis.
In contrast, the government has reduced its stake in Lloyds Banking Group from 43%, when it invested to prop up the company during the financial crisis, to less than 2% and has sold off £12bn of Bradford & Bingley mortgages.
