Royal Bank of Scotland shares dropped 2 per cent on Monday morning, following rumours that the Government will start selling off its majority stake in the bank from Monday night.
Chancellor George Osborne signalled in July's Emergency Budget that he wanted to start selling the taxpayer's 79 per cent stake this year.
UK Financial Investment, which manages the Treasury stakes in RBS and Lloyds, advised by Goldman Sachs, has a narrow window of opportunity to kick-start the sale this week or possibly early next week. But if it is decided market conditions are not favourable the start of the sale is likely to be delayed until September when fund managers have returned from holiday.
The sale is likely to follow the lines of the first few sales of tranches of shares in Lloyds Banking Group which were carried out last year. That would see the stock market informed shortly after the close, or around 4.35pm, that UKFI was seeking to dispose of a stake in RBS, which is headed by chief executive Ross McEwan (pictured), and had appointed a syndicate of banks to do so through a so-called accelerated book-building process. Under this, investors indicate what they are prepared to pay for a certain number of shares with the banks calculating how they can sell the stake at the highest price.
Indications are that UKFI will look to sell at least a 5% stake, which at today’s price of 337.3p — down 4.9p — would be worth just under £2 billion. That would represent a significant loss on the 502p average price paid in the £45 billion bailouts of RBS in 2009.
Meanwhile, the taxpayer stake in Lloyds has fallen to 13.9% after the sale of another 1%, raising just over £500 million through the process being handled by Morgan Stanley.Given the success of this process, Osborne is facing calls to abandon plans for a retail sale of some of that final stake.
A retail offer would almost certainly have to be done at a discount to today’s share price of 83.6p.Reuse content