Senior figures at the Royal Bank of Scotland believe Chancellor George Osborne could be set to start
selling the £46 billion taxpayer stake in the bank as early as next year.
RBS sources claim the bank will be back in a sustainable profit position by the end of 2011, and
believe the time could be right for the government to start selling off the public stake that helped
bail out the bank at the height of the financial crisis. Sources close to the Chancellor also agree that
the push to privatisation could begin next year.
A report in September by the Independent Commission on Banking will help set the terms for
the privatisation of the public share in RBS and Lloyds Banking Group, which was also bailed out
at the taxpayer’s expense. However the government’s decision on when and how to handle the
privatisations is likely to be driven by market factors that could influence the money that could be
raised from the deals.
Mooted plans to dismantle Lloyds Banking Group, in an effort to enhance market competition,
would serve to reduce the bank’s strong position in the market, potentially decreasing its
profitability and therefore reducing interest from possible investors. Lloyds’ retail banking division
alone currently boasts some 30 million personal customers in the UK.
Many analysts expect similar pressure to split RBS – separating the high-street and investment
banking divisions – which will not only affect the organisation’s market price, but could take months
or years to complete, potentially scuppering hopes for an early push towards privatisation.
