World Economy

UK Sells RBS Shares at a Loss of $1.7b

UK Sells RBS Shares at a Loss of $1.7bUK Sells RBS Shares at a Loss of $1.7b

The British government has begun its sell-off of shares in part-nationalized lender Royal Bank of Scotland, raising £2.1 billion ($3.2 billion), a third below the price it paid.

It sold a 5.4% stake at 330p a share, a 7.6p discount on Monday’s closing price, BBC reported.

Chancellor George Osborne is facing criticism for selling the shares at well below the price of about 500p the then Labor government paid for them. The 170p difference represents a loss of about £1.07 billion ($1.7 billion) on the shares sold.

The government’s sale cuts the government’s stake in RBS to 73%.

RBS shares closed on Tuesday at 339p, up 1.4p, or 0.4%, valuing the bank at £39.2 billion.

The UK bailed out RBS in 2008 and 2009 by buying shares for £45 billion and supplying it with cheap funds.

Ian Gordon, a banking analyst at Investec, told the BBC’s Today program: “The taxpayer is being short-changed.” The shares could have been sold for a higher price in February, when they were changing hands for more than 400p, he said.

RBS chief executive Ross McEwan said: “I’m pleased the government has started to sell down its stake. It’s an important moment and reflects the progress we are making to become a stronger, simpler and fairer bank. There is more work to be done but we’re determined to build a bank the country can be proud of.”