The government began to return Royal Bank of Scotland to the private sector this week, seven years after taking a 79% stake in order to save it, and the economy, from collapse. Early this week it placed a 5.2% stake on the market at around 330p a share, raising £2.1bn. In 2008, the government paid 502p a share, and ultimately spent a total of £42bn shoring up the bank.
Meanwhile, Tom Hayes, a former trader at UBS and Citigroup, was found guilty of rigging Libor, a global benchmark interest rate (the London Interbank Offered Rate). He is to serve 14 years in prison.
What the commentators said
Perhaps, said James Moore in The Independent, but this sale will mean losses of hundreds of millions of pounds for the taxpayer, given the gulf between the 2008 purchase price and this week's. Why not wait? "Recent results were rather encouraging." Cost cutting is going well and the capital base is getting stronger. If progress continues, and profitability returns, the shares will be highly sought after and the Treasury could even make a profit.
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"It would be scandalous," agreed Nils Pratley in The Guardian, "if Osborne's desire to get shot of RBS trumps the pursuit of value for money for taxpayers." Enough of this fuss about price, said Lex in the FT. RBS shares may never return to 502p, after all. And it doesn't matter anyway. This wasn't an investment; it was a purchase designed to avoid total economic meltdown. Now that the threat of a collapse has gone, why hold on?
As for Tom Hayes, said The Times, the sentence is "stiff" and "deserved". Rigging Libor "was a staggering fraud". Many transactions including mortgages are based on it, and would have been falsely priced because traders were enriching themselves by rigging the rate. The crime was also so "blatant" that the reckoning for the managers of these traders "must be severe".
Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.
After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.
His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.
Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.
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