RBS may be fully nationalised

| August 2, 2012 | 0 Comments
RBS may be fully nationalised

The Government is believed to be considering plans to buy the 18 per cent of the Royal Bank of Scotland (RBS) it doesn’t already own, bringing the bank under full public ownership.

The government purchased 82 per cent of the bank for £45 billion in a rescue deal at the height of the credit crunch.

The remaining 18 per cent is owned by private investors and it would cost the government around £5 billion to buy them out, according to the Financial Times.

The move would allow the government to force RBS to increase its lending to businesses in order to boost the economy and help it emerge from recession.

However it would mean UK taxpayers becoming fully responsible for the bank’s toxic debts.

Chancellor George Osborne is believed to be in opposition to the nationalisation plan.

Since the government bailed out RBS in 2008, its share value has dropped alarmingly, leaving taxpayers with a huge paper loss.

Earlier this year RBS agreed a share restructuring deal which multiplied existing share by ten, valuing them at around 200 pence per share.

Under the former rule, the shares are worth just 20 pence, compared with 600 pence in March 2007.

RBS is expected to report an interim loss of £1.5 billion after being hit by compensation cost for PPI mis-selling and other costs associated with the recent computer failure which affected customers of NatWest and Ulster Bank.

It is also being investigated by the Financial Services Authority over allegation of rigging Libor, the inter-bank lending rate, and could face a huge fine.

Barclays has already been fined £290m over fixing the Libor rate.

The scandal led to the departure of Barclays’ chairman Marcus Agius, chief executive Bob Diamond and chief operating offer Jerry del Missier.

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