The Government of the United Kingdom has set out its exit strategy from its biggest taxpayer-funded bailout of the financial crisis. It revealed its plans to sell its remaining stake in the Royal Bank of Scotland by 2024 after its bailout of the bank around 10 years ago.
The Government rescued the fourth biggest bank of the United Kingdom with a £45.5 billion bailout in 2008. the Office for Budget Responsibility (OBR) said that it is expected to be able to raise approximately £20.6 billion from the sale.
The OBR disclosed that the current 62.3 percent stake of the Government was worth approximately £18.7 billion, having sold £2.5 billion worth of shares last June.
The Budget watchdog of the United Kingdom said that it was not likely that there would be any additional sales of the shares until 2019-20.
Earlier this month, the UK government pocketed £150 million from the RBS as it paid its first dividend ever since the bailout.
Last September, Sir Howard Davies, the chairman of the RBS admitted that it was “unlikely” that the government would be able to recoup all of the £45.5 bllion that it invested into the bank in 2008.
He said thar the bank had lost £130 billion over the decade since and incurred restructuring costs that amounted to £15 billion.
The exit strategy was confirmed by the government confirmed in its Budget document on Monday.
The document stated: “We consider it reasonable this plan can be achieved.” It adding that RBS had made some good progress in turning itself around and drawing a line under the crisis-era legal problems.
“It remains the government’s objective to return RBS fully to the private sector when it represents value for money to do so and market conditions allow.”
It added: “Over the past year RBS has made significant further progress on resolving its legacy issues.”
It continued: “The government now intends to undertake a full disposal of the RBS shareholding by 2023/24 subject to market conditions and achieving value for money.”