The Treasury is prepared to accept a loss on the investment. RBS shares are now 342p, well below the 502p target for the state to break even. The government owns 79 per cent of the bank, a stake worth £17.3bn, reports The Times.
The sale will mark the beginning of the end of the post-credit-crisis era government ownership of big banks. It will also be a defining moment for the Edinburgh-headquartered lender that under the leadership of Fred “the Shred” Goodwin became at one point the largest bank in the world by assets.
His reign came unstuck after the ill-judged acquisition of ABN Amro, the Dutch bank, just before the credit crunch began. RBS came close to collapse but was saved when Alistair Darling, the Labour chancellor, masterminded a plan to inject £45.8bn to buy shares. The government also provided hundreds of billions in emergency loans.
This week’s sale will be aimed at institutional investors, including hedge funds and sovereign wealth funds. A retail sale of the government’s remaining stake in Lloyds bank is planned for next year.
Ross McEwan, chief executive of RBS, has previously said that shares could eventually be sold at a profit, but the initial chunk would have to be at a loss. This would follow a similar route to the sell-down of the government’s stake in Lloyds.
The chancellor hopes to offload shares equivalent to a 6 per cent stake in RBS. He laid the ground for the exit in June when he said that the longer the government held the shares, the worse it would be for the economy.
Analysts say certain investors may snub the share offering as there is still so much uncertainty about the charges facing RBS for its role in selling toxic mortgages in America before the financial crisis. RBS last week reported an unexpected second-quarter profit of £293m.
