MPs told pay row hurts RBS price
POLITICAL interference in the running of Lloyds and RBS will make it hard for taxpayers to break even on the sale of their stakes, shareholders in the banks have told MPs.
In a hearing of the Treasury Committee of MPs, Standard Life’s Keith Skoech said that political anti-bank rhetoric has “had knock-on effects… on sentiment”. He said that investors “are looking for things they can attach some certainty to”, adding that public pressure of the kind that forced RBS chief executive Stephen Hester to forego his bonus has had “a depressing effect on the share price”. “If that persists, it will make a sharp difference to prices,” Skoech added.
Robert Talbut, chairman of shareholder group the Association of British Insurers, said that the bank is being run “not entirely in a commercial way”, putting off investors.
And Talbut, who has been vocal in opposing large pay at other banks, said “[RBS’s] ability to retain a commercial management team is going to be severely inhibited if they do not believe they are going to receive a significant market rate.”
MPs were also warned by other industry figures that it will be hard for taxpayers to get their money back. “No analysts currently value RBS at the break-even price,” said Manus Costello of Autonomous.
The six industry experts that MPs heard from yesterday mostly agreed that they would advise the government it might have to sell the first tranche of shares in Lloyds and RBS at a loss, but had mixed views over whether it could make a profit over the course of several sales, which they all agreed likely to take more than five years.
Schroders’ Richard Buxton was most optimistic, saying: “On average, you will make a profit… over time.”