Chancellor of the Exchequer Philip Hammond has admitted that the Treasury is prepared to sell its stake in Royal Bank of Scotland Group (LON:RBS) at a loss, the BBC has reported. The government bailed out the bank during the financial crisis and still holds a 72-percent interest in the company whose shares continue to trade well below the 502p paid to rescue the lender.
RBS’ share price has gained ground in London in today’s session, having added 1.25 percent to 227.50p as of 09:54 BST, outperforming the blue-chip FTSE 100 index which is currently 0.13 percent worse off at 7,138.39 points. The group’s shares have lost more than six percent of their value over the past year, but have recovered a little over one percent in the year-to-date.
The BBC quoted Chancellor of the Exchequer Philip Hammond as admitting yesterday that the government might have to sell its remaining 72-percent stake in RBS at a loss.
“Our policy remains to return the bank to private hands as soon as we can achieve fair value for the shares, recognising that fair value could well be below what the previous government paid for them,” he told MPs. “We have to live in the real world and make decisions on the future of our holding in RBS in the best interests of taxpayers.”
RBS has yet to return to profitability following its £45.5-billion taxpayer-funded bailout, as it continues to struggle with its turbulent past. Former Chancellor George Osborne kicked off the sale of RBS shares nearly two years ago, offloading five percent at 330p a share and triggering a £1-billion loss for the taxpayer. Further sales, however, have been shelved amid the lender’s ongoing problems, including a pending settlement with US authorities over mis-sold mortgage-backed securities in the run-up to the financial crisis.