Osborne said he had received independent advice from the Governor of the Bank of England that it is now "in the interest of taxpayers" to start the sale, but he has been criticised for selling the bank at an estimated £7 billion loss.
Addressing the annual event in the City of London, the Chancellor said that the “decision point” has been reached, which means that sales of the taxpayer’s stake in RBS will begin in the coming months.
Osborne indicated that sales will take some years and involve all types of investors, but will begin with large institutions before being offered to the public.
The Governor of the Bank of England wrote to the Chancellor to emphasise that it is in the public interest for RBS to be returned to private ownership, as this will “promote financial stability, a more competitive banking sector, and the interests of the wider economy” while avoiding “considerable net costs to taxpayers of further delaying the start of a sale”.
Rothschild also advised the government to begin an initial disposal of RBS shares, because it will improve the marketability of the remainder of its shareholding, and market conditions for financial assets and bank shares are currently good.
The advice from Rothschild sets out that in the absence of unforeseen circumstances, taxpayers can "comfortably expect to secure proceeds from their interventions in the banks that exceed the money they put in".
Rothschild’s report shows that if the government sold all its remaining shares in the banks (including RBS) at the share price as at 5 June 2015 – and taking into account the fees and other proceeds received from the banks as a result of the taxpayer’s support during the financial crisis - taxpayers would get back over £14 billion more than they put in. That contrasts with government estimates at the time of the interventions in 2009 that losses could be between £20 billion and £50 billion.
