UK must sell RBS, Lloyds soon - taxpayer lobby

LONDON Tue Apr 3, 2012 8:21am BST

Pedestrians are reflected in the window of a branch of the Royal Bank of Scotland in London August 5, 2011. REUTERS/Suzanne Plunkett

Pedestrians are reflected in the window of a branch of the Royal Bank of Scotland in London August 5, 2011.

Credit: Reuters/Suzanne Plunkett

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LONDON (Reuters) - Britain must sell its Royal Bank of Scotland and Lloyds stakes as soon as possible because keeping them is allowing politicians to gamble with people's money on bank shares, according to a lobby group representing taxpayers.

"Clearly the best outcome for taxpayers would be if we don't make a loss on those shares, but we simply cannot predict what the share price will be tomorrow," TaxPayers' Alliance campaign director Emma Boon told Reuters.

"Politicians shouldn't play the stock market with other peoples' money, imagining that they might get a better or worse price if they buy or sell today or tomorrow. Who's got a crystal ball and can say they'll be worth much more in the future?" said Boon, whose organisation campaigns for lower taxes.

"If we hold onto our shares in the banks, then that might turn a profit eventually but the returns could just as easily not justify even the current price. If taxpayers want to take that risk, they can do so with their own money," she added.

Britain pumped 66 billion pounds ($106 billion) into RBS and Lloyds to prop them up during the 2008 credit crisis. The government ended up with 82 percent of RBS and 40 percent of Lloyds. It aims to sell those stakes back to the private sector eventually. However, taxpayers have consistently been sitting on losses of some 20 billion pounds on the RBS and Lloyds holdings.

The average price at which Britain acquired its RBS shares was 49.90 pence, while the Lloyds shares were bought at an average price of 63 pence. RBS and Lloyds shares have traded at roughly half that value for much of the last year.

Speculation has recently mounted that Britain might sell an initial tranche of shares in RBS at a loss.

UKFI, the organisation set up to manage the government's bank shareholdings, signalled to a parliamentary committee last month that an initial RBS sale could take place sooner than expected, despite the losses this would incur for taxpayers.


Analysts say that doing so could boost trading volumes in the stock, thereby making it more attractive for investors.

Sources with knowledge of the matter have also told Reuters talks have been ongoing over the sale of a stake in RBS to Abu Dhabi, though no deal is thought to be imminent.

The TaxPayers' Alliance, which is funded by individual donors and has been a high-profile critic of big bonuses in the banking and rail industries, said a deal with an overseas sovereign wealth fund was a possible option.

"They (the government) should not choose between potential buyers on any basis other than where they can get the best price," Boon said.

RBS CEO Stephen Hester told Reuters last month "the faster the government starts selling its stake, the better for everyone.

Some analysts have speculated the government might not start any sale of its RBS and Lloyds shares until just before the next scheduled general election in 2015, in order to generate a mass share give-away for the public to win votes.

However, Boon said the TaxPayers' Alliance would be opposed to delaying a sale just to win votes.

"What is the thinking behind waiting until 2015? If it is because politicians are concerned about how this might affect voting intentions, then they are putting their political careers ahead of taxpayers' interests - which is wrong."

(Editing by Mark Potter)

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Comments (8)
Investor70 wrote:
As Taxpayer I have to say that I have not authorised the Taxpayers’ Alliance to speak for me.

Since The then government bailed out RBS and Lloyds on behalf of Taxpayers, much water has flowed under the bridge. The banks in question are now better capitalised than before and they now appear to be much better managed. If they continue on this course, their respective share prices should improve in time. It may well be the right strategy to sell off small tranches at the currently low share prices in order to stimulate interest and to create some liquidity in the shares. However, I cannot see how Taxpayers would benefit from a hasty sell off of all the shares whilst they remain at these depressed levels.

Selling the shares should be a common sense commercial decision made when the time is right and not for the sake of political expediency.

Apr 03, 2012 9:37am BST  --  Report as abuse
martin333 wrote:
Emma Boon should stick to subjects she knows something about. Politicians (Taxpapers more like it) were forced to bail out the banks and the Tax Payer is entitled to get our money back. Selling at a lost is not the way. In 3 years time we can expect to get back far more that if we sold now.To use words like gambling just goes to show the attitude of British people who hide their money under the mattress ( Cash ISA’s and Building Societies)

Apr 03, 2012 9:41am BST  --  Report as abuse
ChinaRory wrote:
The tax payer allows the Govt to gamble with their money every time they pay tax.There is no such thing as ‘Taxpayers Money’ and never has been. When has the taxpayer ever had a say it what the Govt does with its tax receipts ? The Govt is gambling with tax receipts all the time. Every time a cut in spending is done, here, there or anywhere it is nothing more than a gamble that the system will survive it.Did the bail out of banks help people in general ? No it didn’t.Ask any SME, What it has done of course is make cheap money available to banks to carry on doing risky investments, make huge enough profits to pay out good bonuses,and the icing of course is they can then create annual losses through entries in the accounts disguised as a provision for bad debts and risky investments. 1bn, 2…pick a figure. They will slowly readjust that guess to suit and pay some tax using money that is worth less than it was a year ago.
The whole thing is a joke and the idea of selling off RBS or LLoyds at a loss is the biggest joke since TH sold off our( sorry…their) gold.

Apr 03, 2012 9:49am BST  --  Report as abuse
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