Investors upbeat on Lloyds but fear political meddling in RBS

Tim Wallace
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INVESTORS are keen to snap up the government’s stake in Lloyds, it emerged yesterday after George Osborne announced plans to move forward the re-privatisation of the banking group.

But they are less happy to put their money into RBS – analysts downgraded the lender after the chancellor unveiled plans to consider breaking RBS up.

The government is also putting more pressure on RBS to cut down its profitable investment banking operations, to force it to lend more to the UK retail and business market, again making it less attractive to investors, delaying any potential sale and hitting returns for the taxpayer.

“Any hope of a near-term sell-down of part of the government’s 81 per cent stake is de factor abandoned, and poor RBS appears set to remain a political football – still exposed to the risk of yet further costly ‘rolling restructuring’ which benefits no-one at all,” said Investec’s Ian Gordon.

The bank’s share price plunged 4.95 per cent yesterday.

A study by Hargreaves Lansdown found just 44 per cent of its investing clients would be interested in applying for RBS shares.

By contrast 65 per cent would be interested in Lloyds shares.