Yahoo Finance City financiers to revive radical RBS plan
A group of City financiers are planning to revive a radical plan to hand the Government’s huge stake in Royal Bank of Scotland to the public.
Portman Capital Partners is preparing to approach UK Financial Investments (UKFI), which manages the taxpayer’s 71pc stake, after the general election over a scheme that could allow the Government to divest itself of the shareholding in one fell swoop.
The plan was first proposed by Portman about six years ago as an alternative to a traditional privatisation, with Barclays advising UKFI on how it might be implemented. But it was shelved after chancellor George Osborne insisted the government must wait to see if it could recoup its investment in RBS.
It is understood Portman believes the scheme could be revived after Philip Hammond, Mr Osborne’s successor, told MPs earlier this month he wanted to return the loss-making bank to private ownership “as soon as we can achieve fair value for the shares”.
In a sign the Government is preparing to take a multi-billion pound hit on a privatisation, Mr Hammond added that “fair value could well be below what the previous government paid” for the stake.
The Government’s break-even price on its RBS investment is 502p-a-share and the stock currently trades well below that level, closing at 265p on Friday evening.
Portman’s proposal involves the Government giving taxpayers shares in RBS for free.
A so-called floor price would be set and once the stock hits it, investors would be allowed to sell. For example, if the floor was 300p-a-share and an investor sold at 325p, they would pocket the difference, and the rest would go back to the Government.
The proposal has the advantage of rewarding taxpayers directly for the bailout of RBS.
The hand-out would be accompanied by a more traditional share placing with City institutions so that powerful index-tracking funds could also buy the stock.
