Royal Bank of Scotland share sale held off over uncertainty

The British taxpayer’s stake in Royal Bank of Scotland (RBS) will not be sold until the lender spins off Williams & Glyn and tackles a hefty fine from US authorities, according to a top government shareholder.

UK Financial Investments (UKFI), which holds the British public’s 72 per cent stake in RBS, said investors would be reluctant to snap up the bank’s stock at present because there is too much uncertainty over the two issues.

RBS is awaiting a settlement figure from the US Department of Justice following an investigation into the way it sold residential mortgage-backed securities (RMBS) in the lead-up to the 2008 financial crisis.

UKFI chairman James Leigh Pemberton said the financial markets are speculating that RBS may be hit with a fine of anywhere between $5 billion and $12 billion, but that is not a view held by the organisation.

Discussions

It comes after RBS said last month it is likely to miss the 2017 deadline to sell off Williams & Glyn, but it is still in discussions with a number of interested parties.

Speaking to the Treasury Select Committee, UKFI chief executive Oliver Holbourn said it is “very difficult” to say when it could start selling shares again in RBS.

“There are really two big issues that investors want more clarity on now before we think they will be willing to buy shares in sufficient size.”

– (PA)