RBS shares rise as Philip Hammond admits the government's stake may be sold at a loss

Emma Haslett
Follow Emma
Referendum Debate Continues As Campaigns Enter Final Week
RBS may be sold off at a loss, Philip Hammond said yesterday (Source: Getty)

Shares in RBS rose in early trading today after chancellor Philip Hammond warned the government's stake in the lender may be sold at a loss.

Having risen as high as 228p after the markets opened, shares in the lender, which is 72 per cent owned by the taxpayer, were trading at 227p at 9am, one per cent higher.

During the height of the financial crisis, the government bought its stake in RBS for £45.5bn, or 502p per share. Hammond's predecessor, George Osborne, insisted the lender will only be sold off once it reaches that level, but at a session in the House of Commons yesterday, Hammond admitted the government has to "live in the real world".

"Our policy remains to return the bank to private hands as soon as we can achieve fair value for the shares, recognising that fair value could well be below what the previous government paid for them," he said.

"We must live in the real world and make decisions on the future of our holding in RBS in the best interest of taxpayers."

However, he added that the government is "not at present actively marketing [its] stake in RBS".

RBS' fate shows a marked difference to that of Lloyds, which was also bailed out by the government in 2008, when it bought a 43 per cent share for £20.5bn.

However, after the lender returned to profit in 2010, the government began selling off its shares, and earlier this month cut its stake to under two per cent.

Meanwhile, in February RBS reported a loss of almost £7bn, its ninth consecutive annual loss.

Read more: Shareholders urged to vote out RBS' Davies

Related articles