Autumn Budget 2017: UK government to generate £15bn over the next five years from RBS share sales

 
Lucy White
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The government has been waiting for RBS's share price to pick up (Source: Getty)

The UK government is planning to generate £15bn by 2023 through the sale of Royal Bank of Scotland (RBS) shares, chancellor Philip Hammond revealed in the Autumn Budget today.

Starting in the 2018/19 financial year, the government plans to sell £3bn worth of shares annually for the following five years.

This would constitute around two thirds of the government's stake at current market prices.

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

RBS has made significant progress on resolving its legacy issues and refocusing on serving British businesses and consumer,” Hammond's budget read.

“It remains the government’s objective to return the bank fully to the private sector when it represents value for money to do so and market conditions allow.”

The government ended up with a stake of almost 80 per cent in RBS, after the bank was saved by a £45bn taxpayer bailout at the height of the financial crisis.

Selling this stake has proved problematic, as the bank's share price has remained stubbornly low. UK Financial Investments, the body that controls the government's stake in RBS, reduced its shareholding in 2015 but admitted this represented a £1bn loss for taxpayers.

Hammond further pointed out that the government fully exited its stake in Lloyds Banking Group earlier this year. “Sales of the government’s stake in the bank generated over £21.2 billion for taxpayers, representing almost £900 million more than the original investment,” he said.

Read more: Lloyds Bank is returned to full private ownership as the government banks a profit for the taxpayer

The Budget added that the government would continue to explore options for selling wider corporate and financial assets, “where there is no longer a policy reason to retain them and when value for money can be secured for taxpayers”.

So far this year, this has involved the sale of the UK Green Investment Bank, the continuation to sell part of the pre-2012 student loan book, and Network Rail's sale of the leases for commercial space under railway arches.

Read more: Macquarie exec defends Green Investment Bank deal and talks up commitment to green finance and the UK

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