*Facepalm* The government is selling its shares in RBS and not even trying to make a profit

George Osborne’s business tactics leave much to be desired

“Buy high, sell low” seems to be the chancellor’s philosophy.

Back in 2008, the government paid £45.5bn to bail out beleaguered bank RBS. The government’s 80% stake is now worth £32bn, and yet George Osborne seems to think this is the right time to sell.

In his Mansion House speech in the City last night, the chancellor said it was “decision time” on RBS.

Osborne was advised by Bank of England governor Mark Carney and financial advisor Rothschild to offload the business, and in the past he said he would sell the bank “as quickly as we can to get rid of it”.

The chancellor said: “Yes, we may get a lower price than Labour paid for it but the longer we wait, the higher the price the economy will pay.”

To make it worse, RBS hasn’t been paying dividends to shareholders since then – meaning the taxpayer had nothing back from the bank since we bought the shares. Analysts think shareholders will most likely need to wait until 2017 to get any returns, making RBS an unattractive investment, at least in the short term.

The sale will not happen overnight and will likely take years to fully complete – but will be finished by the next election.

Far be it for me to criticise people who have no business or economic training or experience, but if it were me, I’d only sell once the shares had appreciated to at least what I paid for them. It sort of seems like common sense.


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Readers' comments (2)

  • Or perhaps £32 Billion invested elsewhere could bridge the gap quicker, or reduce UK borrowing, therefore reducing interest payments, therefore getting back to even Steven quicker than holding onto a non performing asset for too long.

    Our annual interest payments on UK debt are circa £45billion.
    Lets say we wait until our £32billion in investment matures by £13bn to break even we'd have to also service some debt along the way, lets assume 5% interest paid that's £8.2bn over the next five years and therefore we'd have to wait to sell at £53.2bn to break even, so approx. 605p per share, making your Twitter bet rather hypocritical.

    Or they could splurge on some Apple shares and put Apple pay on al public transport and make some dividends and some money

    When you're holding a Turkey you gotta toss it.

    Poorly researched and executed article - learn some arithmetic.

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  • Thanks Oliver and glad to hear you've got faith in the British banking sector. Interestingly, you seem to think RBS shares won't rise. Do you think this about all banks? It's not just RBS, none have anywhere near recovered their pre-2008 share price.

    You talk about investing in Apple. Smart move if British businesses don't mind their tax money invested in a US company. Let's think about the message that sends to the under-invested tech sector in the UK - the government profits from your failure to compete with the world's biggest company. Not to mention that public transport is privatised and the government has no hand in what payment methods those businesses use.

    Nice idea but maybe it's you who should learn some arithmetic, Oliver.

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