George Osborne said his Mansion House speech tomorrow will outline plans for returning Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc to private hands and vowed taxpayers will recoup their investment.
“We want to return these banks to private ownership,” the U.K. chancellor of the exchequer said in an interview with BBC Radio today. “We want to make sure the taxpayer gets value for money. We want to get the money back. We want these banks to be strong supporters of the economy in Britain.”
Prime Minister David Cameron said in an interview last week that U.K. voters are more interested in getting their money back from RBS than in its quick return to the private sector. RBS Chief Executive Stephen Hester, who joined the bank in 2008 following its 45.5 billion-pound ($71.3 billion) bailout, said last week he will quit his job by the end of the year, without naming a successor.
“He’s done a very good rescue job,” Osborne said. “Now we’re moving to the recovery phase of RBS.” He said Hester made the decision to quit, though as chancellor his “consent and approval” was sought.
The U.K. Parliamentary Commission on Banking Standards is set to publish a report on the industry. Lawmakers hadn’t reached a consensus over whether to recommend RBS should be broken up, three people familiar with the discussions said last week. RBS, which has started to cut 2,000 investment-banking jobs, said in a memo to employees last week it will exit its equity derivatives and structured retail products divisions.
RBS closed yesterday at 316 pence a share, below the 407 pence where taxpayers break even. Lloyds closed at 61.3 pence, just above the 61-pence-per-share cost of the state bailout. The U.K. owns 39 percent of London-based Lloyds and 81 percent of Edinburgh-based RBS after the previous Labour government injected 65.8 billion pounds into the two lenders during the financial crisis.
“We can begin to think about returning RBS to private ownership, with the very important provision that we get our money back,” Osborne said. How the government achieves its objectives “is going to depend on market conditions at the time,” he said.
“Absolutely at the heart of this is my determination that we have a banking system that works for the British economy rather than an economy that supports the banking system, which is what we inherited,” Osborne said.