THE government is set to make almost £30bn from its emergency bailout of British banks, according to new research out today.
At the time of the bailout, some observers predicted the taxpayer would end up nursing losses of around £850bn.
But The Banker magazine says a combination of recovering profits, rising equity markets and fees charged on loans and guarantees will net the government a massive £30bn profit.
British taxpayers are currently breaking even on their 83.2 per cent holding in Royal Bank of Scotland (RBS) and 41.3 per cent shareholding in Lloyds Banking Group when dividends and other earnings are taken into account.
If the equity market rises in line with economic growth, the taxpayer is likely to see a paper profit of £19bn within five years, according to an estimate by the Centre for Economics and Business Research. A further £8bn will be due from fees for loans, bond guarantees and the Asset Protection Scheme (APS).
Lloyds paid £2.5bn to join the APS, even though it did not ultimately participate. And RBS has so far paid £1.4bn for the guarantee, although losses are unlikely to be large enough to require taxpayer money.