THE GOVERNMENT is sitting on a £69bn loss from bailing out the banks during the financial crisis, the Office for Budget Responsibility (OBR) revealed yesterday.
It means the last government paid double what the shares of RBS and Lloyds are worth today: their stock has fallen 45 per cent and 51 per cent respectively since their rescue in 2008, for a current loss of £30.6bn.
“This is significantly larger than the implied £1.6bn loss reported in the March [forecast],” the OBR admits.
That comes in addition to losses from guaranteeing the nationalised banks’ most toxic assets in 2009 under the Asset Protection Scheme. Far from a gain of £3.4bn predicted in March, the OBR now forecasts a £25.6bn loss to the taxpayer from the scheme.
And the OBR has also published a new figure giving the cost of raising the money to finance the Treasury’s various interventions, which comes to £12.8bn over 39 months.
The total makes for a grim £69bn loss from the bailouts at current valuations.
The plunging value of bank assets on the Treasury’s books make privatising Lloyds and RBS a distant prospect, despite hopes earlier in the year that the government could sell down its stakes over the next two to three years. It will be reluctant to sell when doing so would crystallise a huge loss for taxpayers and add to the national debt.
Bank share prices have been hit hard by the Eurozone crisis, with even RBS chief Stephen Hester last week admitting that most investors see their stock as a “dumb place” to invest.