Britain will start selling its 32 billion-pound stake in Royal Bank of Scotland (RBS.L) in the coming months, Chancellor George Osborne said on Wednesday, giving up on his previous intention to only sell the shares for a profit.
Osborne said he had received independent advice from the Bank of England and from investment bank Rothschild that it was in the interests of taxpayers to start selling the shares in the bank which was rescued at the height of the financial crisis.
“In the coming months we will begin to sell our stake in RBS. It’s the right thing to do for British businesses and British taxpayers,” Osborne said in an annual speech to financiers in the City of London.
The announcement represents a milestone for Osborne, who is trying to move on from the aftermath of the financial crisis.
In the same speech, he said he will seek to bind future governments to his vision of permanent budget surpluses,
something rarely achieved in modern Britain.
And BoE Governor Mark Carney, speaking at the same event, said “the age of irresponsibility is over” as Britain announced a clamp-down on abusive practices in financial markets after a string of scandals.
Rothschild said taxpayers were on course to lose more than 7 billion pounds on the RBS rescue although they would make a profit from the full bailout plan which included other banks.
RBS, Britain’s fourth-biggest bank by market value, was saved from collapse by former prime minister Gordon Brown’s Labour government during the 2007-09 financial crisis at a cost of 45.8 billion pounds to taxpayers, leaving the government holding an 80 percent stake.
It also paid 20.5 billion pounds to rescue Lloyds Banking Group (LLOY.L).
“From bailing out the banks to bringing them back from the brink, now is the time for RBS to rebuild itself as a commercial bank no longer reliant on the state, but serving the working people of Britain,” Osborne said.
BoE Governor Mark Carney backed the sale, saying in a letter to Osborne that it was in the public interest to return RBS to private ownership.
Carney said the move will “promote financial stability, a more competitive banking sector, and the interests of the wider economy” while avoiding “considerable net costs to taxpayers of further delaying the start of the sale”.
Osborne said it will take “some years” to sell the entire stake.