Chancellor of the Exchequer George Osborne has been reported to have agreed to sell the government’s £32 billion stake in Royal Bank of Scotland at a loss.
This quick decision has been made in order to help the bank, economy and the taxpayer, who would end up losing £7.2 billion if all shares were sold at the current price, according to The Financial Times.
Osborne defended his decision by remarking that although this wasn’t the simplest of ideas, it was correct. “I’m not interested in what’s easy — I’m interested in what’s right,” Osborne said.
The chancellor revealed that Bank of England governor, Mark Carney agreed with this decision. “It is in the public interest for the government to begin now to return RBS to private ownership,” Carney said.
As one of the banks severely affected by the 2008 financial crisis, the sale of RBS is a momentous occasion in an attempt to reform the banking system.
Last week, RBS was valued at £32 billion and Osborne said that he had grown tired of waiting for the share price to rise above what Labour paid for the bank. “Yes, we may get a lower price than Labour paid for it but the longer we wait, the higher the price the economy will pay,” the chancellor said.
It is expected that years will pass before RBS is fully privatised, but the bank should be restored before the next election in 2020. RBS senior executives, however, are keen for the privatisation to start as soon as possible because of concerns surrounding state control.
Although, insiders say that the sale could occur in the fourth quarter, after RBS have completed a multibillion-pound settlement with US regulators for mis-selling subprime mortgage securities.
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