Government to sell 7.7% RBS stake at £2bn loss

The sale will comprise of around 925 million shares with a current price of £2.81,  well below the £5.02 the government paid as part of the £45.5 billion bailout during the financial crisis.

The share sale returns £2.5 billion to UK taxpayers and chancellor Philip Hammond defended the desicion, stating: "This sale represents a significant step in returning RBS to full private ownership and putting the financial crisis behind us. The government should not be in the business of owning banks. The proceeds of this sale will go towards reducing our national debt - this is the right thing to do for taxpayers as we build an economy that is fit for the future."

Laith Khalaf, senior analyst at Hargreaves Lansdown, commented: "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 £1.1 billion, or £1.9 billion 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. Today’s 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."