Government in talks with Abu Dhabi over RBS

| March 27, 2012 | 0 Comments
Government in talks with Abu Dhabi over RBS

The UK government is negotiating with Abu Dhabi sovereign wealth funds over the sale of a stake in Royal Bank of Scotland (RBS), the BBC reported yesterday.

It is believed that Abu Dhabi, which is part of the oil-rich United Arab Emirates, could buy up to a third of the government’s 82% stake in the UK bank.

With RBS shares trading at a substantially lower price than the government acquired them for in 2008, the deal is likely to mean a substantial loss for the UK taxpayer.

The UK government bought the shares for £45.5bn in 2008-9 in order to bail out RBS following its ill-advised takeover of ABN Amro prior to the credit crunch.

Although selling the shares to Abu Dhabi would be loss-making, the sale could generate further interest from the private sector in the bank and this could see its share price increasing to a break-even position.

The UK government’s stake in RBS is held by UK Financial Investments, a company set up in November 2008 to manage its shareholding in rescued banks.

Speaking to the BBC the Treasury said: “The government’s policy has always been to return RBS to the private sector, but only when it delivers value for money for the taxpayer.”

In other banking news, US company GE has revealed plans to open its first British bank – GE Capital Direct.

The internet bank would try to attract billions of pounds of savings in its first year of trading.

The Financial Services Authority has approved GE Capital Direct’s banking licence and it can start offering a full range of banking services.

Its launch is part of GE’s global plan to diversify forms of finance following the credit crisis.

The company which is the world’s largest conglomerate and has an AA+ credit rating, recently opened GE Direkt in Germany.

Tags: Abu Dhabi, bank bailout, , ,

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