It looks like you could be selling your shares in Royal Bank of Scotland to investors from Abu Dhabi.
What's that you say? You don't own any shares in RBS? Well, of course, all of us British taxpayers actually do. In fact we own 83% of the bank following its £45bn bailout in 2008.
There are several reports today that the body which administers our holdings in RBS, UK Financial Investments, has held meetings with Abu Dhabi's sovereign wealth fund to sell between 10% and 30% of the government's stake.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
When the government invested in RBS, it paid 49.9p per share. After rising 6% through Tuesday morning, the shares currently sit at 29.41p. In other words any sale to Middle Eastern investors will be at a loss of around 40%.
On the other hand, the government may feel that raising some cash from a partial sale now is better than waiting indefinitely for a white knight to take the whole company off its books.
The other point worth considering is that any losses taxpayers incur must be set against the cost of letting RBS go bankrupt. The odd billion here or there is pretty small fry compared to the prospect of every cash machine in the UK refusing to pay out people's savings. Perhaps RBS has been a good investment after all.
BS
