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| Chancellor to set out RBS plan in Mansion House speech | Chancellor to set out RBS plan in Mansion House speech |
| (35 minutes later) | |
| George Osborne is expected to use his Mansion House address to senior City figures next week to sketch out how he intends to start the sale of the government’s 79% stake in Royal Bank of Scotland since the 2008 crisis. | George Osborne is expected to use his Mansion House address to senior City figures next week to sketch out how he intends to start the sale of the government’s 79% stake in Royal Bank of Scotland since the 2008 crisis. |
| In the runup to the general election, Osborne signalled his intention to kickstart a disposal programme for RBS early in this parliament and he has used the set-piece address at Mansion House in the past to outline policies on the banking sector. | |
| RBS is still 79% owned by the taxpayer, in contrast with Lloyds Banking Group where the government stake has fallen below 19% after it was announced on Monday that another tranche of shares had been sold into the market. | RBS is still 79% owned by the taxpayer, in contrast with Lloyds Banking Group where the government stake has fallen below 19% after it was announced on Monday that another tranche of shares had been sold into the market. |
| Osborne said he would press on with selling the taxpayers’ stake in Lloyds after recouping £10.5bn for the exchequer through a series of disposals in the past 18 months. | Osborne said he would press on with selling the taxpayers’ stake in Lloyds after recouping £10.5bn for the exchequer through a series of disposals in the past 18 months. |
| A programme of dripfeeding Lloyds shares into the market – which was due to finish at the end of the month – is being extended to the end of the year, while some shares are being earmarked for sale to retail investors in the next 12 months. | A programme of dripfeeding Lloyds shares into the market – which was due to finish at the end of the month – is being extended to the end of the year, while some shares are being earmarked for sale to retail investors in the next 12 months. |
| The stake in Lloyds stood at 43% after the 2008 bailout when £20bn was pumped into Lloyds and HBOS, the ailing bank it rescued at the height of the crisis. | The stake in Lloyds stood at 43% after the 2008 bailout when £20bn was pumped into Lloyds and HBOS, the ailing bank it rescued at the height of the crisis. |
| Osborne did not make any reference to RBS as he set out his plan for Lloyds on Monday. In March, in the runup to the election, he made clear that his focus would be on RBS should he be returned to the Treasury. | |
| “There are constraints around it, but it’s certainly something I would want to get moving on in the summer after the election. I would want to see a review on a plan for disposal,” Osborne said in March. | “There are constraints around it, but it’s certainly something I would want to get moving on in the summer after the election. I would want to see a review on a plan for disposal,” Osborne said in March. |
| The remaining stake in Lloyds also featured in election campaigning. In April, David Cameron said small investors would be able to buy up to £4bn of Lloyds bank shares at a discount and there would be a “loyalty bonus” of one additional free share for every 10 shares investors still held after a year. | |
| No such detail was provided on Monday when the Treasury stated there would be a retail offering for investors, a pledge it has made on numerous occasions. The announcement followed the pledge by Osborne in his budget in March to sell off another £9bn of shares in Lloyds in the next 12 months. | No such detail was provided on Monday when the Treasury stated there would be a retail offering for investors, a pledge it has made on numerous occasions. The announcement followed the pledge by Osborne in his budget in March to sell off another £9bn of shares in Lloyds in the next 12 months. |
| Osborne first sold shares in Lloyds in September 2013 and again in March 2014 through placings with institutional investors, but in December he initiated a trading plan to dripfeed shares into the market for six months, which has now been extended to the end of the year. | Osborne first sold shares in Lloyds in September 2013 and again in March 2014 through placings with institutional investors, but in December he initiated a trading plan to dripfeed shares into the market for six months, which has now been extended to the end of the year. |
| “We’re determined to get on with the job of returning Lloyds to private ownership. That’s why I’m extending the plan for six months so that we can make even more progress in returning money to the taxpayer and paying down the national debt,” said Osborne. | “We’re determined to get on with the job of returning Lloyds to private ownership. That’s why I’m extending the plan for six months so that we can make even more progress in returning money to the taxpayer and paying down the national debt,” said Osborne. |
| Lloyds shares closed at 88.6p on Monday – above the 73.6p average price at which taxpayers bought the stake. The chancellor reiterated on Monday that shares would not be sold below this price. | Lloyds shares closed at 88.6p on Monday – above the 73.6p average price at which taxpayers bought the stake. The chancellor reiterated on Monday that shares would not be sold below this price. |
| But shares in RBS were trading at 341p – below the 502p average price at which taxpayers bought the stake. They are also below the 407p price published by the government in March 2013 as the average at which the shares were trading when they bought, rather than the actual prices paid. Any review on a disposal programme would likely consider what price might be acceptable to begin a sell-off. | But shares in RBS were trading at 341p – below the 502p average price at which taxpayers bought the stake. They are also below the 407p price published by the government in March 2013 as the average at which the shares were trading when they bought, rather than the actual prices paid. Any review on a disposal programme would likely consider what price might be acceptable to begin a sell-off. |