Simon English: Patience would be a virtue in timing the sale of state's stake in recovering RBS
Thursday 18 October 2012
Outlook We take out insurance for things we hope will never happen. A car crash. Burglary. Death. (I've sorry news to report about that last one: the insurance won't entirely help you.) So it was with Royal Bank of Scotland and the government-backed insurance scheme that has covered its supposedly "toxic" assets for the past two years.
This insurance was helpful, in that it meant the bank we all own did not have to sell things it no longer wanted at panic prices (disclosure time: I own even more of RBS than you do. I believe in chief executive Stephen Hester so much that I double dipped, as they'd say on Wall Street).
That said, the insurance was almost certainly overpriced, a rare example of the Government (any government) striking a good commercial deal at the bottom of the market.
RBS has paid £2.5bn to the Treasury so far for cover it probably didn't need. So it is good news that it is now quitting this scheme, a sign of confidence.
There's one downside, which is that it may make ministers think they can move quickly towards selling at least part of the state's 80 per cent stake back to the City. The noises from officialdom were otherwise yesterday, but that's just what they say rather than what they may think.
A Conservative-led government doesn't like the idea of the state owning large banks as a matter of philosophy.
But a quick sale of even part of its holding feels like a mistake.
Even City bankers that might stand to pick up hefty fees for advising on such deals tell me they think this is a clear hold and wait situation.
Riches await. Just be plain that there is no rush here.
That would allow Mr Hester to continue his rescue operation unbothered by such speculation. Paradoxically, it may be easier for him to show that RBS is no longer a toxic bank on government life support while under the cloak of being owned by the Government.
In the case of Northern Rock, the state rushed to sell off the "good" bit of that bank far too quickly.
It should have held on to it.
Once the economy recovers – it will, some day – RBS will return to being the cash machine it once was. Mr Hester won't know where to hide the money that is flooding in.
At that point a refloat of RBS at far above the 50p at which the Government bought in will suddenly look like an attractive deal for all of us. Patience.
- 2 Saudis risk new Muslim division with proposal to move Mohamed’s tomb
- 3 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 4 Cee Lo Green: It is only rape if the victim is conscious
- 5 Nigerian witch-finder Helen Ukpabio threatens legal action against human rights organisations
Emma Watson on Jennifer Lawrence naked photo leak: 'Even worse than seeing women's privacy violated is reading the comments'
Victoria Justice on naked photo leak: 'Let me nip this in the bud right now – pun intended'
Ariana Grande nude photos leak: Pictures are completely fake, say representatives
Saudis risk new Muslim division with proposal to move Mohamed’s tomb
Kate Upton nude photos leak: Model's spokespeople 'looking into' authenticity of indecent images
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Ashya King: Parents of five-year-old boy refused permission to visit him in hospital and denied bail at Spanish court
With Douglas Carswell joining Ukip, my party has taken another giant step forward
When elitism grips the top of British society to this extent, there is only one answer: abolish private schools
Ashya King: 'Cruel NHS has not given us the treatment we need', says father of five-year-old with brain tumour who fled to Spain
iJobs Money & Business
£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...
£700 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, J2EE, J...
£500 per day: Harrington Starr: SQL Developer SQL, C#, Stored Procedures, MDX...
£500 per day: Harrington Starr: C#.NET Developer C#, WPF, WCF, ASP.NET, Prism...