UK govt may sell part stake in RBS to Abu Dhabi: BBC

Stephen HesterThe UK government is facing a backlash from the opposition after the BBC yesterday reported that the government is in talks to sell a significant stake in the Royal Bank of Scotland (RBS) to Abu Dhabi sovereign wealth fund.

Selling off the RBS shares, which are currently trading at half the average price paid by the government in 2008, is expected to be fiercely resisted by the British Labour Party and even the Lib Democrats.

BBC said that the government would sell up to one-third of its stake. At current prices, British taxpayers could potentially lose £1 billion for every £2 billion paid by the government in bailout funds to RBS at the height of the global financial crisis.

The UK government holds 83-per cent stake in RBS, and at current market prices the holding is worth £13.5 billion, far below the £45.5 billion it had paid to bail out the bank in late 2008 and early 2009.

The government had purchased RBS stock at an average of 50 pence a share, which is currently down to 27.8 pence.  According to reports the stake sale to the Abu Dhabi sovereign wealth fund is expected to be at around 32 pence a share.

"Flogging off RBS shares this year at a loss would be the worst of all worlds," said Lord Oakeshott, a Lib Democrat. "We poured £45 billion into RBS to save it and make it lend, not as a share punt.''