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.
Times are so tough in Italy that Mafiosi are considering getting jobs
The man they forgot to lock up: Mike Anderson was sentenced to 13 years in jail, but the police never came
Queen turns 88: David Bailey captures another side of the Queen in birthday portrait
Unbeliebable: The White House offers 'no comment' to anti-Justin Bieber petition
South Korea ferry disaster: Families watch as remains of Sewol victims returned to shore
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
'Sinful': Video of British Muslims dancing to Pharrell Williams's hit Happy comes under attack
An open letter to Nigel Farage: you may smile, but I am not seduced
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
Abdullah Deghayes: My son was the martyr of a just cause, says father of British teenager killed in Syria conflict
- 1 ‘Leeds is on fire’: Huge chemical-fuelled blaze on Armley industrial estate leads to hazardous smoke warning for city
- 2 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 3 Queen turns 88: David Bailey captures another side of the Queen in birthday portrait
- 4 Loch Ness Monster found on Apple Maps?
- 5 Criminals ‘using unmanned drones and infrared cameras to find illegal cannabis farms’ – and then steal from the growers
iJobs Money & Business
Negotiable: Harrington Starr: Database Team Lead ( Leadership, Sybase, Compute...
£40000 - £50000 per annum + Bonus+Benefits+Package: Harrington Starr: C#.NET D...
£25000 - £35000 per annum + Bonus+Benefits+Package: Harrington Starr: VB.NET S...
£45000 - £55000 per annum + Bonus and Benefits: Harrington Starr: Trade Suppor...