SALE OF RBS SHARES COST TAXPAYERS £2,100 MILLION
The UK government this morning confirmed it has sold £2,500 million of its stake (7.7%) in RBS to institutional investors at a price of £2.71 per share, a discount of 10p on yesterday’s closing price.
This has delivered a huge loss for the taxpayer. According to UK Government Investments, £5.02 is what the UK Government initially paid for each RBS share during the bailout. Based on this price, the taxpayer took a loss of £2,100 million on last night’s share sale.
However, a Freedom of Information request provided to Hargreaves Lansdown last August, the National Audit Office calculated the cost of RBS shares which also factored in the cost of financing the share purchase, based on the 3.7% interest rate paid by the UK Government to borrow money in 2008/09 and 2009/10.
Accordingly, the average cost of RBS shares came in at £6.43 per share on 01 January 2017. This therefore doesn’t include the cost of financing over the last 17 months, which would increase it further.
Based on this price, the taxpayers’ loss on last night’s share sale rises to £3,400 million.
Patricia Gibson MP commented:
“It’s clear the losses sustained by the taxpayer on the RBS bailout will be substantial. Whilst selling part of its stake in the bank represents a gradual return to ‘business as usual’ - although hopefully without the high risk over-extended investments of the past - this loss is a hard one for the taxpayer to take.
“The UK Government still owns 65.2% of RBS and should sell shares only gradually, when it can maximise the return to the taxpayer. Meanwhile, such a shareholding is a reminder that the UK Government is failing in its duty to protect the taxpayer another way – by halting the closure of 259 RBS branches, including Kilbirnie, Kilwinning and Saltcoats in my constituency.”