Govts could take 7 years to exit bank stakes -PwC

Thu Nov 12, 2009 12:01am GMT
 
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* 2-3 years to sell major stakes, 5-7 yrs for full exit -PwC

* Stakeholder should influence issues from "inside the tent"

* Past shows banks need to be cleaned up before govt exit

LONDON, Nov 12 (Reuters) - Governments may take up to seven years to sell stakes in banks bailed out during the financial crisis, due to complexity of rescue deals and an unattractive disposal environment, PricewaterhouseCoopers said on Thursday.

Any hopes of a swift government exit are misplaced, accountant PwC said, citing the experience of bailing out banks in countries such as Japan, Norway and Sweden and recent bank privatisations in eastern and central Europe.

"It could easily take two to three years to sell major stakes, but up to five to seven years before governments are able to fully divest of their stakes and related guarantees," said Jon Sibson, a partner and UK government and public sector leader at PwC.

Given the limited chance of a quick exit, the main focus of governments should be on influencing issues from "inside the tent", PwC said. That includes focusing on wider economic and social objectives, rebuilding confidence and trust in the financial system, and credible plans to address fiscal deficits.

"The key lesson from past privatisations is that the financial institutions or non-bank firm needs to be cleaned up prior to sale," PwC said.  Continued...

 

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