The government began to return Royal Bank of Scotland to the private sector this week, seven years after taking a 79% stake in order to save it, and the economy, from collapse. Early this week it placed a 5.2% stake on the market at around 330p a share, raising £2.1bn. In 2008, the government paid 502p a share, and ultimately spent a total of £42bn shoring up the bank.
Meanwhile, Tom Hayes, a former trader at UBS and Citigroup, was found guilty of rigging Libor, a global benchmark interest rate (the London Interbank Offered Rate). He is to serve 14 years in prison.
What the commentators said
It’s about time RBS was reprivatised, said Allister Heath in The Daily Telegraph. “Nationalisation is always a disaster for banks”: the state makes poor decisions on allocating capital and lending becomes politicised. RBS will be better off in the private sector.
Perhaps, said James Moore in The Independent, but this sale will mean losses of hundreds of millions of pounds for the taxpayer, given the gulf between the 2008 purchase price and this week’s. Why not wait? “Recent results were rather encouraging.” Cost cutting is going well and the capital base is getting stronger. If progress continues, and profitability returns, the shares will be highly sought after and the Treasury could even make a profit.
“It would be scandalous,” agreed Nils Pratley in The Guardian, “if Osborne’s desire to get shot of RBS trumps the pursuit of value for money for taxpayers.” Enough of this fuss about price, said Lex in the FT. RBS shares may never return to 502p, after all. And it doesn’t matter anyway. This wasn’t an investment; it was a purchase designed to avoid total economic meltdown. Now that the threat of a collapse has gone, why hold on?
As for Tom Hayes, said The Times, the sentence is “stiff” and “deserved”. Rigging Libor “was a staggering fraud”. Many transactions – including mortgages – are based on it, and would have been falsely priced because traders were enriching themselves by rigging the rate. The crime was also so “blatant” that the reckoning for the managers of these traders “must be severe”.