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Government taps City to discuss RBS sale

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Government taps City to discuss RBS sale

Officials in charge of the government’s stake in UK banks have reportedly begun tapping up City brokers to scope the level of buyer interest in its remaining holding in the Royal Bank of Scotland.

The approach comes just days after the bank revealed it had reached a preliminary $4.9 billion (£3.6 billion) settlement with US prosecutors over remaining pre-financial crisis liabilities.

That was far lower than an upper estimate of $12 billion analysts had feared RBS could be on the hook for, and effectively cleared one of the outstanding barriers to a return of dividend payments and full privatisation. Shares have since jumped more than 7% to 294p, the highest since January.  

The Times reported that officials at UK Government Investments (UKGI) began calling brokers last week to open preliminary talks about placing its outstanding 71% stake in the business.

The ongoing pain at RBS has meant the government has been forced to hold onto much of its stake in the enterprise, even as it has divested its stake in Lloyds.

It has only been able to recoup £2.1 billion of its original £45 billion investment, with a sale of 5.4% of equity in the summer of 2015. The sale at 330p crystallised a loss of just over £1 billion, with a sale at its current price meaning accepting a deeper discount.  

According to the Times, Citigroup, Goldman Sachs, Morgan Stanley and UBS led the prior sale, while JP Morgan has more recently been appointed an adviser to UKGI.

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