I have received numerous letters regarding the privatisation of the Royal Bank of Scotland (RBS).
The ownership of the majority of RBS shares by the Government is a result of a Labour government bailout, which injected a total of £45.5 billion into the bank between October 2008 and December 2009 in order to maintain financial stability at the height of the financial crisis. As a result, the UK Government became a majority shareholder of RBS and by December 2009, acquired a total economic ownership of 84.4% of the bank. On 4 August 2015, the Government began the process of selling shares, with government ownership of ordinary shares now standing at 62.4%.
The sale of RBS shares is a necessary step as the UK Government rid itself of the last vestiges of the 2008 financial crisis. The latest sale of RBS shares that occurred in June 2018 raised £2.5 billion for the taxpayer.
The purpose of the Government bailout of RBS between 2008-2009 was to achieve financial stability, not profit. The sale of £2.5 billion worth of shares in 2018 demonstrates the progress that has been made in addressing the legacy issues associated with RBS that were contributing to the bank’s losses.
After a decade of losses, in 2017 RBS made a profit of £752 million, showing that the bank is now ready to operate normally within a free market. It is not the Government’s role to own banks, and the focus should not be on the artificial loss that is highlighted, but on the return of funds to the taxpayer. The proceeds of the sale of shares have gone towards the reduction of our national debt. It should be noted that the sale of RBS shares followed advice from UK Government Investments (UKGI), the body which provides expert advice on corporate finance and corporate governance, who stated that selling shares represented the best value for money for the taxpayer.
February 2019