Labour has slammed the government’s decision to resume the sale of its shares in Royal Bank of Scotland, after it offloaded a 7.7 per cent stake in the lender at a loss of more than £2bn.
The Treasury announced it was selling part of its holding in RBS, which it has owned since bailing the bank out during the financial crisis, on Monday.
On Tuesday, the government said it had successfully completed the disposal of the shares, selling them to institutional investors for net proceeds of just over £2.5bn.
This represents a loss of £2.1bn, as the shares were bought at just over 500p each, while they were sold at 271p.
Shadow chancellor John McDonnell said: “There is no economic justification for this sell-off of RBS shares. There should be no sales of RBS shares, full-stop. But because of this government’s obsession with privatisation, the taxpayers who bailed out the bank will now incur an enormous loss.
"Taxpayers are paying the price for the Tories’ mismanagement of RBS over the past eight years.”
Fiona Cincotta, senior market analyst at City Index, warned that it would be difficult for the Treasury to make a good return on its investment in RBS.
“Even with carefully timed sales the government may not be able to regain the full sum it put into keeping the bank afloat,” she said.
Meanwhile, John Glen, the economics secretary to the Treasury and city minister, told the BBC that RBS needs to return to the private sector even if shares need to be sold at a loss.
"I would love it if we could sell the shares at a much higher price, but we need to be realistic and look at the market conditions,” he said.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “The RBS share price has bounced back from its slump after the EU referendum, but the taxpayer’s still going to be significantly out of pocket as the government sells down its stake. Few argue the RBS bailout was necessary to maintain financial stability, but the cost of that intervention is now starting to emerge.
He added that the share sale is “good news for private investors in RBS because it is a step towards becoming a normal bank again, though government sales may put downward pressure on the share price in the near term”.
Shares in RBS dropped 4 per cent in early trading.
