By Max Colchester
The U.K. government said Tuesday it has sold a 7.7% stake in Royal Bank of Scotland Group PLC, pushing on with a plan to shed its ownership in the Scottish bank at a loss.
The U.K. Government Investments Ltd, which controls the British government's 70% stake in RBS, placed 925 million shares at 271 pence each with institutional investors and sold the stake for GBP2.51 billion ($3.34 billion). The sale price was a 3.5% discount to RBS's closing price on Monday.
Originally a share sale was slated for last week, but those plans were disrupted by the market gyrations following political upheaval in Italy and Spain.
The British government has previously said it aims to shed around GBP3 billion of RBS shares by March 2019.However bankers warn it could take years for the government to fully extricate itself from RBS.
The British government has come to terms with the fact that it will never get the money back that was injected into RBS to stave off its collapse. British taxpayers paid on average GBP5 per RBS share during the bailout.
RBS, which was bailed out with GBP45.5 billion of taxpayer money in 2008, has dealt with a series of litigation issues and patched up its balance sheet, which has led analysts to speculate when it may be in a position to pay dividends again and given investors more clarity on its true value.
RBS is still making its way through the final stages of a decade long turnaround plan, which shrunk it to a U.K.-focused corporate and retail business from the world's largest bank by assets. A recent deal to pay $4.9 billion to settle with the Justice Department over the sale of toxic mortgage-backed securities in the lead-up to the global financial crisis cleared the path for the bank's privatization.
Write to Max Colchester at email@example.com