Royal Bank of Scotland (RBS) shares rose yesterday morning after reports Britain had held talks to sell part of its stake to Abu Dhabi investors.
RBS was up 4.6 percent at ￡0.2902 — compared with an ￡0.499 average price at which Britain acquired its 83 percent stake — to be the top gainer on London’s blue-chip FTSE 100 index, which was up 0.3 percent.
“Slowly, but surely, winding down the government’s stake is a better option than a quick-fire sale which would struggle to attract enough buyers of the stock,” said Simon Denham, chief executive of spreadbetter Capital Spreads.
“The UAE [United Arab Emirates] has come to the rescue of our banks before when they bought a huge slug of Barclays just after the banking crisis so that it did not fall into the hands of the government. If they can turn their investment in RBS into anything like the returns they had on their Barclays shareholding, they will do very well out of it, which, in turn, should be to the benefit of the wider British economy,” Denham said.
However, there could be a public backlash if the government is seen to be selling the stake off too cheaply, although investors and analysts said any sign the government is considering an exit route would be good news.
Britain has owned a stake in RBS since bailing it out with ￡45 billion (US$72 billion) during the 2008 credit crisis, after RBS was left overstretched by its role in the takeover of Dutch bank ABN AMRO.
Britain also owns 41 percent of Lloyds after a similar bailout in 2008, and it has always been the government’s intention to sell its holdings back to the private sector.
UK Financial Investments, which holds the government’s stakes, has held regular talks with investors about their views on the industry and RBS, which has included meetings with sovereign wealth investors, including from Abu Dhabi, sources said.
However, two people said a deal was not imminent.
British Treasury Select Committee Chairman Andrew Tyrie told the BBC on Monday that the committee would look closely at any deal to make sure the taxpayer received value.
“It strikes me as sensible to take an opportunity if it is there,” he said.
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