Britain begins sale of stake in bailed-out Royal Bank of Scotland
Britain's government on Tuesday began selling its majority stake in Royal Bank of Scotland, which was rescued with the world's biggest banking bailout at the height of the financial crisis.
The government has sold at a loss 5.4 percent of RBS for £2.1 billion ($3.3 billion, 3.0 billion euros) to reduce state debt and kick-start the lender's full return to the private sector.
Edinburgh-based Royal Bank of Scotland was rescued with £45.5 billion of public money in 2008.
RBS has since reported losses totalling about £50 billion and has axed more than 30,000 jobs, with thousands more reportedly set to follow.
"The government has today begun the process of selling its shares in the Royal Bank of Scotland. It has sold 5.4 percent of the bank at a price of 330p per share," the Treasury said Tuesday.
"The £2.1 billion raised from the sale will be used to pay down the national debt."
But with the state having bailed out RBS at a cost of 500 pence a share, the taxpayer has taken a hit on the sale totalling about £1.0 billion.
Finance minister George Osborne insisted that the move was "an important first step in returning the bank to private ownership, which is the right thing to do for the taxpayer and for British businesses".
He said the move would "promote financial stability, lead to a more competitive banking sector, and support the interests of the wider economy".
Back in February, Royal Bank of Scotland said it would end investment banking in the Middle East and Africa and significantly reduce its presence in Asia and the US after a seventh straight annual loss for 2014.
But it recorded a 27 percent rise in net profits for the second quarter of this year, with the sale of US operations offsetting higher exceptional costs.
Shares in RBS rose 0.65 percent to stand at 339.80 pence in late morning deals on London's FTSE 100 index, which was 0.30-percent higher at 6,709.00 points.
"Osborne's comments that the sale should lead to a more competitive financial sector need time to be borne out for sure," said Brenda Kelly, head analyst at London Capital Group.
"The bank has struggled of late to turn a profit that can be deemed sustainable and... the bank has a long road ahead to regain any momentum."
Tuesday's announcement comes one day after the government sold a further 1.0 percent stake in Lloyds Banking Group, a British lender rescued with some £20 billion of state funds following the global financial crisis.
Widely regarded as in far better shape than RBS, Lloyds last week posted a 31 percent jump in quarterly net profits.
The government's holding currently stands at just below 14 percent, down from 41 percent following Lloyds' bailout.
© 2015 AFP