The British government on Tuesday sold 7.7% of Royal Bank of Scotland share for a whopping 2.5billion pounds. Britain realized a loss of over 2billion pounds on part of its investment in RBS.
The government sold the shares for 271 pence each in overnight placement to institutional investors; a price almost half of what it paid during the bailout. Back in 2008, the government bailed RBS with 45.5 billion pounds during the financial crisis.
Britain’s finance minister, Philip Hammond on the sale, said that it is a significant step in returning RBS to full private ownership and putting the financial crisis behind us.
The nations opposition Labour party heavily criticized the sale after plans were announced on Monday evening. The Labour party said that taxpayers would lose out and that the government should have held out for more.
RBS under former CEO, Fred Goodwin embarked on an aggressive expansion course before its disastrous bid for Dutch lender ABN AMRO in 2007 left it perilously weakened as the financial crisis hit.
The government plans to sell the rest of its 62 percent stake in RBS over the next few years, most likely in a similar fashion to Monday night’s sale. There are speculations that it could offer some of the shares to the public.
Image Credit: REUTERS/Peter Nicholls
