RBS government stake to be sold, chancellor announces

The government plans to sell its stake in the Royal Bank of Scotland, Chancellor George Osborne has announced in his annual Mansion House speech.

Mr Osborne said the “decision point” had been reached.

Governor of the Bank of England Mark Carney said the phased sell-off “would promote financial stability” and benefit the wider economy.

Mr Osborne also set out more details of the sell-off of the Government’s remaining stake in Royal Mail.

Royal Mail employees will share a further 1% tranche in the the firm, while 15% will be placed with institutional investors.

The government provided RBS with a £45.5bn bailout in 2008, paying around 500p a share. The share price currently stands at 354.8p.

The chancellor argued that the sale must be seen as a whole and the share price will increase in subsequent offerings as confidence grows.

Mr Osborne said: “It’s the right thing to do for British businesses and British taxpayers. Yes, we may get a lower price than that was paid for it – but we will get the best price possible. For the longer we wait, the higher the price the whole economy will pay.”

A review from Rothschild investment bank said that, despite this price gap, taxpayers can expect to make £14bn more than it paid out in bank bailouts if the sale of bank assets and fees already received are taken into account.

RBS has already paid back about £5bn in fees and repayments for insurance systems set up by the government as part of the bailout.