RBS share sale ‘value for money’ despite loss, says NAO

17 Jul 17

The first sale of shares in the Royal Bank of Scotland lost the government £1.9bn but was still value for money, according to the National Audit Office.

An NAO report published last week into the offloading of RBS shares in August 2015 concluded that the sale, managed by United Kingdom Financial Investments Limited (UKFI), a Treasury-owned body, was “well planned and organised” despite a failure to recoup the public funds invested into the bank.

NAO head Amyas Morse said: “The sale was consistent with the Treasury’s overarching objective to not be a permanent investor in UK financial institutions, and UKFI’s objective to execute a strategy for disposing of investments in an orderly and active way.

“It was executed as skillfully as could reasonably be expected, and on the basis of the preparation, process and proceeds of the transaction, UKFI achieved value for money.”

In August 2015, the government sold 630 million shares in RBS (5.4% of the bank) to institutional investors, reducing government's holding to 72.9%.

The shares sold for 330 pence each. This represented a 2.3% discount to the market price and raised £2.1bn

The NAO states that the initial disposal of RBS shares was executed at a price that was £1.9bn less than the cost for those shares, which the government acquired for reasons of “financial stability” and not for the purpose of making a profit.

The government injected a total of £45.5bn into RBS between October 2008 and December 2009.

In May, the government announced it had sold the last of its Lloyds bank shares after a £20.3bn bailout, which netted taxpayers an extra £900m.

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