RBS privatisation unlikely in the short-term

RBS is in the red, with traders playing the wait-and-see game, after the bank’s privatisation was described as ‘not urgent’.

The comment came last week from the secretary of state for business, innovation and skills, Vincent Cable, who stated that there is no need to rush the privatisation of RBS. The bank overstretched itself during the credit boom and required financial assistance, so it is now 82% owned by the UK government. The aim of the rescue was to prevent the bank from collapsing and bring stability to the UK banking sector during the credit crunch. In the past few years, RBS has sold off ‘non-core’ assets in an effort to raise cash, strengthen its balance sheet and most importantly make it more attractive to prospective buyers.

There have been a number of different options available to the UK government, one of which is to offer shares to members of the public. Mr Cable is happy with the progress being made to privatise the bank, but warned that the process should not be too hasty. While the UK government owns a majority stake in RBS its share price will remain relatively low, but once there is talk of the privatisation going ahead we could see more interest in the company.

Royal Bank of Scotland Group plc chart

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