PRIME Minister David Cameron yesterday indicated that the government will opt to retain its stakes in the banks for a while longer in order to influence their SME (small and medium sized enterprise) lending policies, rather than selling them off as soon as possible to maximise value for the taxpayer.
Cameron, speaking at the CBI’s annual conference at the Grosvenor House Hotel on Park Lane, said the top priority for the government would be to establish “a balance between getting the best return for the Treasury and making sure the UK has a good and competitive banking sector”.
He added: “I want a banking sector that is really focused on SME lending as something that will drive the business, in place of a desire to build a bigger and bigger investment bank.”
UKFI, the body set up by the government to manage its stakes in the Royal Bank of Scotland and Lloyds Banking Group, has so far refused to set a timescale for selling the shareholdings. After a brief period where both banks were trading above the price of the government’s investment at the height of the crisis, RBS and Lloyds have both now seen their shares dip back below the threshold. The net cost of the government’s investment in RBS and Lloyds was 49.9p and 72.2p per share respectively, while shares in the banks closed yesterday at 45.4p and 68p.
Earlier this year, UKFI appointed Bank of America Merrill Lynch banker Jim O’Neil to oversee the sale of the taxpayer’s stakes, doing the work of two of its alumni – John Crompton and Tim Sykes.
UKFI has had its fair share of management upheaval since it was founded in 2008. RBS chairman Sir Philip Hampton and Pearson’s Glen Moreno both held the chairmanship for a period before London & Continental Railways chairman Sir David Cooksey took up the role. And ex-chief executive John Kingman, the Treasury mandarin, left the body to join Rothschild in July 2009 after scarcely half a year in charge.