Consumer Rights: New generation of Sids could get the chance to buy banks

Ordinary voters may be able to invest if Chancellor starts selling the taxpayers' stakes

The departure of Stephen Hester as head of the Royal Bank of Scotland seems to give the green light for a speedy re- privatisation of the state-owned banks. So if you fancy owning a few shares in a bank, your opportunity could be coming soon.

The Chancellor, George Osborne, is hoping to start selling off the taxpayers' stakes in Lloyds Banking Group (39 per cent), the Royal Bank of Scotland (82 per cent) and eventually the "bad bank" run by UK Asset Resolution which was formed after the demise of Northern Rock and Bradford & Bingley.

He'd like to have the Lloyds and Royal Bank of Scotland (RBS) sales completed by the next election in 2015 to win some political brownie points and claw back some of the £64bn the state pumped into the stricken banks.

All the signs are that he wants ordinary people to have the chance to become shareholders and he's expected to give more details of what he proposes in his Mansion House speech on Wednesday.

Of course, it was our money that bailed out the big banks in return for part-ownership when they got into difficulties in 2008. However, we'd already handed that money over to the Treasury in tax, and the Government used it to keep the banks afloat, so sadly we're not going to be given shares without handing over more. We'll be asked to apply and pay, just as we were encouraged to buy shares in British Gas and other utility companies just over 25 years ago.

Perhaps we'll see a new campaign along the lines of the "Tell Sid" British Gas campaign in the 1980s. It was hailed as a big success at the time and many people who had never dreamt of owning shares in any company decided to have a go.

The number of UK shareholders tripled as a result and those privatisations – criticised by many as selling off the family silver and as reckless because our essential utilities shouldn't be run by private companies out to make a profit, with shareholders rather than customers at the top of their agenda – led to a change in the make-up of the UK's shareholding population.

People became used to the idea of buying, owning and selling shares, as well as receiving dividends, and much more interested in how companies operated.

The current Government is reported to believe that having ordinary voters as bank investors would be popular with people who want more say in how the banks are run. And holding bank shares may be popular with small investors who feel that the banks' problems are over and share prices can only improve.

Certainly in the long run, people who bought shares in British Gas did quite nicely, thank you. About 1.5 million "Sids" bought shares and, although many sold those in the first week, more than half a million still have some down the back of the sofa. Anyone who bought the minimum 100 shares at the original price of £1.35p each would now have a holding worth around £1,700.

So how much are Lloyds and TSB shares likely to cost? Well, the National Audit Office has to be sure that any sale of the Government's stake in the banks will get best value for the taxpayers before the sale goes ahead.

The Chancellor is keen to get on with it and share prices in both banks are getting gradually closer to the thresholds the Treasury has set before the Government starts to sell off its holding.

Lloyds should be first on the market next year, with the RBS sale later in the year. There are various proposals as to how a sale might work.

One idea is that investors are given shares worth as much as £1,650, but they won't have to pay for them until they're sold, with the investor keeping any profit. The offer would be available to people with national insurance numbers and who are on the electoral roll.

However it's done, the distribution could create millions of first-time shareowners. In the run-up to a sale the Government will attempt to create a healthy demand for shares. Ultimately, the completely privatised banks need to have stable share prices and be strong enough to compete on a commercial basis, raise capital and increase lending to businesses.

The devil of the sale will be in the detail. Would-be investors should never invest more than they can afford to lose and should take sound financial advice before they commit themselves, because – as we've seen over the past few years – even the big banks aren't a foolproof investment.


Q: I am having trouble with my teeth and need a lot of dental treatment that's not available on the NHS. The dentist has given me a quote to go private but I can't afford it and am thinking of going abroad. The flights, accommodation and treatment in Poland or Hungary (pictured) would be cheaper than the dentist's bill here. Are there any risks, or should I take a loan and get the treatment here? FG, Portsmouth

A: Most of the work carried out abroad is advanced treatments such as crowns, bridges, veneers and larger reconstructions involving implants. As far as I can discover, most people seem happy with their treatment. The only problems seem to be over communication and aftercare. Try to find a dentist abroad who speaks good English and check out his or her qualifications. Doing research will reduce the risks of facing an even bigger bill to put things right back home if it all goes pear-shaped. If you do need follow-up care in the UK, your dentist will need all the information about the way procedures were carried out. If you decide treatment in the UK is the best option, take independent financial advice. If the treatment's essential you may have no choice but to borrow – but check out all your loan options first.