Seven years after bailout, Britain starts RBS sell-off with $3 billion stake sale

Mon Aug 3, 2015 1:49pm EDT
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By Steve Slater

LONDON (Reuters) - Britain started the sale of a 2 billion pounds ($3.1 billion) stake in Royal Bank of Scotland (RBS) (RBS.L: Quote) on Monday, beginning the disposal of its holding in the bank seven years after a multi-billion pound bailout at the height of the financial crisis.

UK Financial Investments, the body that holds the government's RBS stake, said it would sell about 600 million shares, representing 5.2 percent of the bank, in a quick-fire sale to institutional investors after the market closed.

Shares were sold at a price of 330 pence each, a bookrunner on the deal said. The price reflected a 2.3 percent discount on Monday's closing price.

Britain owns 78 percent of RBS after rescuing it with 45.8 billion pounds of taxpayer cash at the peak of the credit crunch in 2008. Its stake will reduce to 73.2 percent.

The sell-off, being made at a loss on the price originally paid, had been widely expected to start soon after Finance Minister George Osborne said in June he was keen to start disposing of shares as soon as possible, and aimed to sell at least three-quarters of the stake in the next five years.

The disposal marks a milestone in Britain's recovery from the 2007/09 financial crisis and its drive to return RBS and Lloyds Banking Group (LLOY.L: Quote) to the private sector.

The government will make a loss on the first RBS sale since the shares were bought at an average price of 502 pence each and UKFI holds them on its books at 455p, including fees it has received related to the investment.

Bookrunners on the sale have already received orders from investors to buy all the shares on offer, one bookrunner on the deal said. The sale is expected to be completed before Tuesday's market opening.   Continued...

A sign is displayed outside of a branch of The Royal Bank of Scotland in central London, Britain May 20, 2015.  REUTERS/Neil Hall