Government may need to sell RBS stake at a loss

The Government may need to sell a stake in RBS or Lloyds at a loss before it can attract more investors to buy into later share offerings, Rothschild's joint head of equity advisory, Adam Young, told MPs on the Treasury Select Committee yesterday.

"It is a good strategy to start a disposal programme with the first tranche at the lowest price," Mr Young said. "The loss is worth taking today because it is part of a programme."

The Government has held talks to sell part of its 82 per cent stake in Royal Bank of Scotland to Abu Dhabi investors in a deal that could lose taxpayers billions of pounds, although a sale is not imminent.

Mr Young also said there were concerns among investors that RBS's senior management could be hounded out by media and public fury over bankers' pay before completing the job of restoring the bank to health.