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Nick Hill

Government sells 7.7% stake in RBS worth more than £2.5bn

The government has sold off a 7.7% stake in Royal Bank of Scotland.

The sale of around 925 million shares, which is worth just over £2.5bn at price of 271p, has reduced the government’s holding in RBS from 70.1% to 62.4%.

Citigroup Global Markets Limited, Goldman Sachs International, J.P. Morgan Securities plc and Morgan Stanley & Co. International plc acted as joint bookrunners in connection with the Placing.

UKGI and HM Treasury have instructed the bookrunners not to sell further shares in the RBS for a period of 90 calendar days following the completion of the Placing without the prior written consent of a majority of the bookrunners.

N M Rothschild & Sons Limited acted as Capital Markets Adviser. Freshfields Bruckhaus Deringer LLP acted as legal counsel to UKGI in respect of English and US law.

Commenting on the sale, Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “The RBS share price has bounced back from its slump after the EU referendum, but the taxpayer’s still going to be significantly out of pocket as the government sells down its stake.

“Few argue the RBS bailout was necessary to maintain financial stability, but the cost of that intervention is now starting to emerge.

“We will learn more when details of the share price attained in the sale are released. In August 2015 the government sold 5.4% of the bank at £3.30 per share, which the National Audit Office estimated crystallised a loss of £1.1bn, or £1.9bn if you include the cost of financing.

“RBS has cleared several obstacles which have now unblocked the road to re-privatisation, in particular settling claims for mis-selling mortgage-backed securities in the US. This share sale is good news for private investors in RBS because it is a step towards becoming a normal bank again, though government sales may put downward pressure on the share price in the near term.

“As a business RBS remains a work in progress, and consequently an investment for recovery investors with a long term investment horizon.”

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