UK must sell RBS, Lloyds soon: taxpayer lobby
By Sudip Kar-Gupta
LONDON (Reuters) - Britain must sell its Royal Bank of Scotland (RBS.L: Quote) and Lloyds (LLOY.L: Quote) stakes as soon as possible because keeping them is allowing politicians to gamble with people's money on bank shares, according to a lobby group representing taxpayers.
"Clearly the best outcome for taxpayers would be if we don't make a loss on those shares, but we simply cannot predict what the share price will be tomorrow," TaxPayers' Alliance campaign director Emma Boon told Reuters.
"Politicians shouldn't play the stock market with other peoples' money, imagining that they might get a better or worse price if they buy or sell today or tomorrow. Who's got a crystal ball and can say they'll be worth much more in the future?" said Boon, whose organization campaigns for lower taxes.
"If we hold onto our shares in the banks, then that might turn a profit eventually but the returns could just as easily not justify even the current price. If taxpayers want to take that risk, they can do so with their own money," she added.
Britain pumped 66 billion pounds ($106 billion) into RBS and Lloyds to prop them up during the 2008 credit crisis. The government ended up with 82 percent of RBS and 40 percent of Lloyds. It aims to sell those stakes back to the private sector eventually. However, taxpayers have consistently been sitting on losses of some 20 billion pounds on the RBS and Lloyds holdings.
The average price at which Britain acquired its RBS shares was 49.90 pence, while the Lloyds shares were bought at an average price of 63 pence. RBS and Lloyds shares have traded at roughly half that value for much of the last year.
Speculation has recently mounted that Britain might sell an initial tranche of shares in RBS at a loss.
UKFI, the organization set up to manage the government's bank shareholdings, signaled to a parliamentary committee last month that an initial RBS sale could take place sooner than expected, despite the losses this would incur for taxpayers. Continued...