Government eyes second 2015 RBS share sale

rbs_logoReports have surfaced over the weekend that claim the UK government is planning a second sale of shares in Royal Bank of Scotland to be carried out by the end of this year.

According to the Mail on Sunday, sources in the government have said a 10 per cent placing could be made as early as December, regardless of whether the stock has climbed to a value closer to that at which the taxpayer bought them.

Last Tuesday’s the government sold 630m RBS shares for £2.08 billion, HM Treasury confirmed, with the shares offered to institutional investors at a 2.5 per cent discount to Monday’s closing price of 337.6p - much less than the 502p average paid at the time of the Edinburgh-based giant’s 2008 £45 billion bailout.

Chancellor George Osborne was forced to field some heavy criticism following the first sell-off last week with some commentators saying the sale was rushed.

He has since been told by advisers that he cannot sell another stake until after the Bank of England’s stress test results are published on December 1, the newspaper report claimed.

Osborne could launch the sale, which will be almost twice as big as last Tuesday’s 5.4 per cent stake sale, soon after with a prospectus and two-day roadshow to financial institutions.

Almost two thirds of the first sale was taken up by hedge funds, with the remaining 40 per cent going to ‘long-term’ investors such as pension funds. Fewer than half, 48 per cent, of the buyers were based in the UK.

The Financial Times last week noted an increase in short-selling by hedge fund traders in the lead up to the sale.

RBS shares bounced slightly but are below their 12-month high despite the boost from better-than-expected results in July, which showed the bank returned to profit in the second quarter.

In a statement after Tuesday’s sale, the Chancellor hailed it as an “important first step towards returning the bank to private ownership.”

“This is the right thing to do for the taxpayer and for British businesses: it will promote financial stability, lead to a more competitive banking sector, and support the interests of the wider economy. Now is the time for RBS to rebuild itself as a commercial bank, no longer reliant on the state, but serving the working people of Britain.”

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