The UK government recently unloaded yet another portion of its majority stake in the Royal Bank of Scotland (RBS) taking the bailout losses amount to $5.4 billion. According to a report, the Scottish bank sold 925 million shares for a total $3.4 billion due to which the taxpayers suffered a loss of $2.8 billion. The initial sale was made in 2015 that led to a net loss of $2.5billion. Now with this latest sellout, the government has incurred another loss of £2.1bn.
According to the UK Treasury chief, Philip Hammond, “This sale represents a significant step in returning RBS to full private ownership and putting the financial crisis behind us.”
Shares Sold At Half The Original Price
After these developments, the market capitalization of the bank is around $45 billion which is just one-eighth of the major bank of America, JP Morgan Chase. Simultaneously, the holding of taxpayers in the bank has now fallen to 62.4% from 70.1% after the sale.
Bank Is In Healthier State, Says Treasury Economic Secretary
According to John Glen, the Treasury Economic Secretary, the Scottish bank is now in a much healthier position and the taxpayer will receive some of their money back now. He added that the bank would love if it could sell the shares at a much higher price, but at present would like to take a realistic approach towards the prevailing market conditions.
Glen believes that the bank has covered a long journey and has emerged as a completely different institution from what it was a decade ago prior to the financial crisis. The assets of the bank have fallen significantly. Earlier it had operations spread across 38 countries whereas now it serves only 9 countries. According to Hammond, the sale was necessary for the bank to return to full private ownership and putting the disaster of the financial crisis behind. While defending the decision to sell the shares, the UK treasury chief said that the government should not have ownership of banks and the proceeds coming from this sale will be directed towards reducing the national debt.