Chancellor George Osborne has kick started the government's first sale of shares in Royal Bank of Scotland (RBS) today, a sale likely to raise £2bn for the government.
UK Financial Investments (UKFI), the agency which holds the government's 79 per cent stake in RBS, announced its intention to sell about 600m shares, representing 5.2 per cent of the Treasury's shareholding in the bank, seven years after £45.8bn of taxpayer money was used to bail out the bank in the aftermath of the financial crisis.
The shares are being sold at a £13bn loss, but Osborne has said this will be outweighed by the positive impact the sale will have on the economy, and his decision was supported by Mark Carney, governor of the Bank of England.
A Treasury spokesperson commented that the government's objective was "getting the best value for the tax payer, maximising support for the economy and restoring them to private ownership" and added:
UKFI today advised the Chancellor it would be appropriate to conduct the first sale of the government’s shareholding in the Royal Bank of Scotland. The Chancellor agrees with that advice and has authorised the process to begin.
The sell-off was anticipated to start this week following Osborne's announcement to offload RBS shares "as soon as possible" in his Mansion House Speech in June.
Shares are initially limited to City institutions, but will eventually be made available to the wider population. Following the sale, the taxpayer stake in the bank will fall to just over 73 per cent.