RBS share price: UK plans to sell half its stake in lender in two years

The UK government is planning to sell half of its stake in Royal Bank of Scotland Group Plc (LON:RBS) within two years of a possible initial sale in September, Reuters reported today citing unnamed sources familiar with the matter. This plan suggests that the shares would be sold at a faster rate than anticipated and makes it likely that the government will make a substantial loss on the initial sales of its shares, the newswire notes. The sources, however, said that final decisions on the sale have yet to be made and that the sale process would depend upon several factors, including the bank’s performance, ongoing investigations into past misconduct, and market conditions.

The UK poured 45.8 billion pounds into RBS to rescue the bank during the financial crisis of 2007-2009. This left the government with a 78-percent stake in the lender, which is worth 32 billion at RBS’s current valuation.
Last month Chancellor George Osborne said that he wanted to start selling the stake in the coming months, adding that initial sales would likely result in a loss for the tax payer. Osborne had previously been reluctant to sell shares in RBS at a loss, but the lender’s improving performance has persuaded him that now is the right moment to offload the stock, Reuters said.
In today’s trading, RBS shares were down 3.2 percent at 347.92p, as of 15:03 BST. The stock has fallen 11.8 percent since the start of the year and the company’s market capitalisation currently stands at £40.2 billion.
The 24 analysts offering 12 month price targets for RBS have a median target of 350.00p, with a high estimate of 510.00p and a low estimate of 250.00p.
As of 16:01 BST, Monday, 06 July, Royal Bank of Scotland Group share price is 349.30p.