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?


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

Start your day with The Independent, sign up for daily news emails
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
Life and Style
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all