Governments to retain bank stakes for up to seven years

GOVERNMENTS around the world will hold on to their stakes in bailed-out banks for an average of five to seven years in order to achieve a profitable exit, a new report has shown.<br /><br />The report, compiled by accountancy firm PricewaterhouseCoopers, said the complexity of individual banks&rsquo; situations, difficult market conditions and an unattractive disposal environment would combine to make the possibility of short-term disposals &ldquo;highly unlikely&rdquo;.<br /><br />Jon Sibson, PwC&rsquo;s UK government and public sector leader, said: &ldquo;The aim must be to return the financial system to health, with trust restored, credit flowing normally again and capital more efficiently allocated, while government stakes return to private hands having generated an acceptable return to the taxpayer.&rdquo;<br /><br />The UK government last week revealed the revised terms for Royal Bank of Scotland&rsquo;s participation in its toxic loan insurance programme, the asset protection scheme (APS), under which it will pour a further &pound;25.5bn of emergency funding into the bank.<br /><br />EU competition chief Neelie Kroes also recently gave the go-ahead to split up nationalised Northern Rock into a &ldquo;good&rdquo; and a &ldquo;bad&rdquo; bank, with the intention of selling off the healthy assets to a private sector buyer in the near future.<br />