RBS gears up for Britain's biggest-ever privatisation

Treasury mulls BT-style sell-off but City gives damning verdict

The Royal Bank of Scotland has set a target of 2014 to start Britain’s biggest ever privatisation. Its chief executive, Stephen Hester, said RBS was now “much closer” to being in a position where the Government could “start to sell its stake” in the bank. “The toughest work is behind us,” he added.

The company’s chairman, Sir Philip Hampton, said the 2014 target was a realistic goal. “They [the Government] want to get out and we want them out and we will do anything to assist them,” said Sir Philip.

The Independent revealed this month that the Treasury is drawing up plans to return RBS to the private sector before the next election. Ministers are examining a BT-style shares sell-off and also ways in which shares could be given to taxpayers for free. They want RBS off the Government’s books as soon as possible and believe the move could be a popular pre-election policy – though Downing Street said there was “no timetable” for the disposal.

Sir Philip admitted it was hard to see the Government pursuing a course that did not give tax payers the chance to get involved in the privatisation given the support they have contributed to keeping the bank afloat.

However, he questioned the plans favoured by some senior ministers to give free windfall shares in the bank to tax payers as a way of disposing of the state’s interest.

“You have to look at the logistics of such a plan,” he said. “Would you have to hire Wembley Stadium out every year just to keep in touch with everyone.”

The Government’s desire to shed its stake in RBS was underlined today, when the bank revealed it had paid £607m in bonuses despite recent scandals and another £5.2bn in losses.

Ministers realise that the bank has to pay bonuses to remain competitive but are acutely conscious of the bad publicity such payments bring.

Even as the majority shareholder they cannot veto such bonuses – they only have the power to dismiss the entire board.

Although RBS lost £5.2bn before tax, Sir Philip said £4.6bn of that resulted from changes in the value of the bank’s own debt, an accounting quirk based on how much RBS would have to pay to buy back that debt.

He and Mr Hester said the bank was much stronger than before and was willing and able to lend to small businesses. A lack of credit has been one of the main reasons Britain’s economy has failed to recover as fast as America’s.

Sir Philip said that relations with the Government were still sound. “If you have a majority shareholder you have to expect that majority shareholder to expect to be listened to,” he said.

“The tension in the dialogue is there [because] those things which are best politically are not necessarily the best things for investors. Clearly some of the things we have had to announce and do are a result of a combination of political and regulatory pressures.”

He added: “One of the things which we and the Government are both very conscious of is that the RBS story is only a success if we are privatised successfully. We have a complete unity of purpose but different pressure on how we get there. I know the Government wants to get us out of their hair as soon as they decently can.”

But the City’s verdict was a resounding thumbs down, and the bank’s shares finished the day in a slump, down 22.9p at 323.9. Ian Gordon, an analyst at Investec who rates the shares as a sell, warned that the bank was still financially weaker than expected and said it might not be until 2017 that its return on equity equalled costs.

Flotation: Sharing the wealth?

BT

In December 1984, British Telecom became the first major flotation. Almost two fifths of the shares were given to 2.1 million members of the public and half were bought by major British institutions.

British Gas

Following the perceived success of BT, the British Gas Corporation floated in 1986 as British Gas plc. The “If you see Sid...” ad campaign encouraged people to buy 135p shares.

British Rail

John Major continued the trend in 1993 with British Rail, amid much controversy and lobbying against it. The service had been largely self-sufficient.            

Emma Bamford

Sport
Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Voices
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
Sport
world cup 2014
Sport
Ray Whelan was arrested earlier this week
PROMOTED VIDEO
Arts and Entertainment
In a minor key: Keira Knightley in the lightweight 'Begin Again'
film
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
books
News
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
News
Wayne’s estate faces a claim for alleged copyright breaches
newsJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Life and Style
It beggars belief: the homeless and hungry are weary, tortured, ghosts of people – with bodies contorted by imperceptible pain
lifeRough sleepers exist in every city. Hear the stories of those whose luck has run out
News
Mick Jagger performing at Glastonbury
people
Life and Style
fashionJ Crew introduces triple zero size to meet the Asia market demand
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Santi Cazorla, Mikel Arteta and Mathieu Flamini of Arsenal launch the new Puma Arsenal kits at the Puma Store on Carnaby Street
sportMassive deal worth £150m over the next five years
Arts and Entertainment
Welsh opera singer Katherine Jenkins
musicHolyrood MPs 'staggered' at lack of Scottish artists performing
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Arts and Entertainment
Currently there is nothing to prevent all-male or all-female couples from competing against mixed sex partners at any of the country’s ballroom dancing events
Potential ban on same-sex partners in ballroom dancing competitions amounts to 'illegal discrimination'
News
business
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

£60000 per annum: Harrington Starr: A leading provider in investment managemen...

AVS, JVS Openlink Endur Developer

£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

Technical Support Analyst (C++, Windows, Linux, Perl, Graduate)

£30000 per annum: Harrington Starr: A global leader in trading platforms and e...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice