Your article “The UK is right to sell down final stake in RBS” ( June 6) is a generous assessment of a poorly managed share disposal driven by dubious motives. You assert that the state should not hold large stakes in banks, when the real issue is that banks should not be run in such a way that requires the state to bail them out. An important question to ask should be how can UK taxpayers be best protected after having had to shell out so much in the first place?
You state that the bank is “on the verge of sustainable profitability”. So why has the Treasury decided to hand these gains over to private investors at the 11th hour when the bank is on the cusp of paying dividends?
It is difficult to understand why UK Government Investments has apparently conducted a fire sale of shares at great cost to the taxpayer, while excluding ordinary investors from any opportunity to participate. I have tabled a parliamentary question to the chancellor to ask why a 10p discount was offered on these shares to supplement already strong demand for the book. That represents £92.5m handed to institutional investors, hardly a trifling sum, and simply resulted in driving the RBS share price down by an equivalent to the discount in the next day’s trading.
The argument that the state should not be involved in the business of running banks is a fallacious one, given that the government has only ever managed the bank at arm’s length via UKGI. It has made no interventions on behalf of the many wronged UK businesses that suffered at the hands of its global restructuring unit and is now conveniently walking away.
The main objective here should be, as per UKGI’s own code, protecting and creating value for the taxpayer. I have submitted a freedom of information request to UKGI for the release of board minutes to show how this condition was satisfied.
The taxpayer is the shareholder here and we have a right to transparency over why this decision has been taken now.
Jonathan Reynolds MP
Shadow Economic Secretary to the Treasury, House of Commons, London SW1, UK
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