In Brief

RBS set for biggest privatisation in UK history

US regulators impose $4.9bn penalty and pave way for Government to sell its 70% stake

The long-awaited sell-off of Royal Bank of Scotland is to get the green light from the Treasury after the bank agreed a penalty from the US regulator for selling toxic mortgage bonds in the run-up to the financial crisis.

US regulators handed RBS a $4.9bn (£3.6bn) penalty, more than the $3.6bn (£2.7bn) contingency fund set aside to pay the fine, but less than many experts had predicted.

The fine means the way is now clear for the Government to begin selling off its 71% stake in the bank it nationalised at the height of the financial crisis in 2008.

Jane Sydenham, investment director at Rathbones, said the deal with US regulators represents “an important turning point” for the bank. "It... puts the Treasury in a much clearer position to sell their stake, as buyers would be reluctant if there were still significant fines to pay,” he said.

BBC business editor Simon Jack agreed the financial penalty for RBS’s role in the crisis had been the “last obstacle” standing in the way of selling the Government’s enormous stake back to the private sector in what will be “the biggest privatisation in UK history”.

The question which could determine whether the sell-off is deemed a success is how much the Treasury will make from the sale. Will taxpayers get all their money back ten years on from nationalisation?

Based on current valuations, the Government’s stake is worth around £20bn in shares. This will take several years to sell off, and while the first sales will be at a loss, Jack says the Government will hope that “over time, as the huge overhang of shares to sell dwindles and profits continue to rise, the public may get more money back”.

He notes, though, that the public are unlikely to ever recoup the £45bn poured into what he describes as “the biggest banking debacle in UK corporate history”.

Recommended

The gas crunch
The UK’s gas supplies are reliant on Russian pipelines
Getting to grips with . . .

The gas crunch

EasyJet/Wizz: battle for air supremacy 
Wizz Air and easyJet aircraft
In Brief

EasyJet/Wizz: battle for air supremacy 

Apple event product launches: iPhone 13, Watch Series 7 and more
iPhone 13 and iPhone 13 mini come in five aluminium colours
In Focus

Apple event product launches: iPhone 13, Watch Series 7 and more

The Future Fund
Rishi Sunak: picking winners?
Expert’s view

The Future Fund

Popular articles

Doctor says we should not sleep naked because of flatulent spraying
The feet of a person sleeping in a bed
Tall Tales

Doctor says we should not sleep naked because of flatulent spraying

World’s most extreme weather events in 2021
Wildfire in Greece
In pictures

World’s most extreme weather events in 2021

The man tasked with putting a price on 9/11’s lost lives
Kenneth Feinberg at a Congressional hearing
Profile

The man tasked with putting a price on 9/11’s lost lives

The Week Footer Banner