Is George Osborne right to prioritise a quick sale of the government’s stake in RBS?

Osborne announced he will sell a stake in bailed-out bank RBS in the coming months (Source: Getty)

Nigel Green, founder and chief executive of deVere Group, says Yes

With the current stock market offering reasonable value and conditions, and because the market price was not expected to rise significantly before any action was taken, George Osborne is right to take the decision to prioritise the sell-off the state’s stake in RBS. The Treasury will, however, need to be extremely mindful of where and how the money is used, as it will be, rightly, judged on this action. Taxpayers should also appreciate two key factors. First, it is arguably better for government agencies to devise, implement and manage regulation of the banking system when the banks are not partly government-owned. Second, the primary objective was never meant to be an investment; the government did not dabble in the stock market to make a quick buck– it was a bailout that was deemed absolutely necessary to avoid a financial meltdown.

John Thanassoulis, professor of financial economics at Warwick Business School, says No

With the chancellor announcing plans for a quick sale of RBS, the taxpayer will certainly lose out – RBS originally received a £45.5bn bailout from the government, and its stake is now only around £32bn, a £13bn shortfall. I’m not sure why now is viewed as the right time to start selling. In my opinion, nothing has changed in the last few months – or last year – to warrant such action. It would now be very damaging to RBS and Britain if there were no takers for the stock, so it’ll be under pressure to accept low prices. The government should have looked at the strategy followed with Lloyds and followed in the footsteps of the private equity sector. There, the aim is to turn a company around before bringing it back to the market. At the moment, RBS is not ready, and the government will have to pay someone else to take the risk.

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