CAN THE UK MAKE A PROFIT ON ITS BANK STAKES TOO?

The US Treasury invested a total of $45bn to bail out Citigroup (headed by Vikram Pandit), taking control of 27 per cent of the banking giant. The government has slowly whittled down its stake, with the bank paying back $20bn in preferred stock earlier this year. Last week the government sold 2.4bn shares for $10.5bn. It now estimates it has a cumulative $12bn profit from the bailout, including interest and dividends of $2.9bn.

The Government currently holds a total of 27.6bn ordinary shares in Lloyds (headed by Eric Daniels), including 15.8bn shares taken up in Lloyds’ rights issue. This is equivalent to 41 per cent of total share capital. The total government outlay was £20.3bn. Lloyds’ current market cap is £45bn, valuing the government’s stake at £18bn, meaning an immediate sale would lose the taxpayer in the region of £2bn.

The Government currently holds a total of 90.6bn shares in RBS (headed by Stephen Hester), including 51.0bn non-voting B shares. This is equivalent to 68 per cent of voting share capital and 83 per cent of total share capital. The total government outlay was £45.5bn. RBS’ current market cap is £45bn, valuing the government’s stake in the bank at £37bn – meaning an immediate sale would lose the taxpayer £8bn.