George Osborne may have to consider selling the remaining 73 per cent public stake in the Royal Bank of Scotland (RBS) at a loss, warned the outgoing Head of the Treasury Sir Nick Macpherson. In a recent interview with the Financial Times, Macpherson argues that maintaining state ownership of the bailed out bank is bad for both the economy and the bank itself. Whilst it will be “tricky” for the state to dispose of its £19.2bilion stake in RBS before the next election, Macpherson argued that in the long term, getting the bank back in to the private sector would boost lending and lead to growth for the British economy.
The crucial issue for Mr Osborne is whether there is a case for selling the rest of the state’s shares in RBS for less than the £5.02 paid for them by the taxpayer in the bail-out of 2008. In August 2015, the Chancellor began the path to re-privatisation and authorised the sale of a 5.2 per cent stake at just £3.30 per share. This resulted in a loss of £1.1billion for the treasury. However Macpherson is adamant that this is the judgment that will have to be made if the Chancellor wants to prevent the bank losing its value. Whether further losses will be made remains to be seen, the Treasury said it was “determined to return RBS to the private sector” but declined to say whether it would be at a profit.