Cameron Refuses to Rule Out Selling U.K. Stake in RBS at a LossThomas Penny and Gonzalo Vina
Prime Minister David Cameron refused to rule out selling the British government’s stake in Royal Bank of Scotland Group Plc at a loss as the lender’s management eyes a sale by late 2014.
Cameron said he is “open to all ideas” when asked by reporters in New York yesterday whether he would sell the 81 percent holding for less than the government paid in 2008. The Times newspaper in London said the Treasury is considering a Policy Exchange proposal under which individual investors would receive RBS shares and split any gains with the state.
“I keep a very close eye on this and want to make sure progress is made as fast as possible,” Cameron said. “In terms of returning RBS to the private sector involving people in owning this bank in a genuine way, I’m open to all ideas and proposals.”
Chief Executive Officer Stephen Hester is struggling to turn around RBS and begin the process of returning it to private ownership before the next general election, due in May 2015. The Edinburgh-based lender, recipient of the biggest banking bailout in the world, will be ready for sale by the end of 2014, Chairman Philip Hampton said this week.
“The primary question is getting this bank back into good health, and then obviously -- there are connections between the ownership and health -- but step one is to continue the path to health, and step two is to think about ways of changing its ownership,” Cameron said.
The shares rose 1.5 percent to 307 pence in London yesterday, below the 407 pence a share the government sees as break even on its investment. Although the Treasury paid an average 502 pence a share when RBS got a 46 billion-pound ($70 billion) taxpayer bailout, it has received fees from RBS linked to the rescue.
Cameron could potentially use the proceeds of a sale to fund tax cuts or more spending before a general election that opinion polls indicate his Conservative Party may lose.