![]() Then there is the experience of bank ownership in the past. The market values banks at around half the value of their assets – and probably quite correctly, given that the regulators themselves are concerned about unexploded bombs on their balance sheets. The FTSE 100 index is flirting with five-year highs, and investors' appetite to buy shares appears to have returned in such a low-interest-rate environment.īut there are plenty of reasons to be cautious about buying bank shares – even when, compared with the value of banks' assets, they appear to be cheap. They have had a taste of late: RBS, for instance, has sold nearly half its Direct Line insurance arm and the shares are trading above the 175p float price at just shy of 200p. The Lloyds and RBS networks alone could fetch around £1.5bn each, which means highly paid stockbrokers will be rubbing their hands with glee. Officials are working on a range of options, from a stock giveaway, as favoured by some Liberal Democrats, to a scheme more familiar to fans of Thatcher (as Osborne is) by which the public would be given the chance to buy shares rather than be handed them for free.Īdd to the mix the long-held aspiration of Spanish bank Santander to float off part of its UK arm on the London stock market, and it is not hard to put together a case for a deluge of bank share sell-offs in 12 months' time. ![]() Before the May 2015 election, George Osborne is keen to rid the Treasury of a first tranche of these banks' shares, which have already overstayed their welcome in the public sector. The departure of the chief executive of UK Financial Investments, which looks after the stakes in the bailed-out banks, after a three-year stint appears at first glance to indicate that any sale is off the table.ĭo not be fooled. The second issue is the government's aspirations for RBS and Lloyds themselves. TSB is the old brand being revived by Lloyds for its network, while Williams & Glyn's is the historic name being resurrected by RBS. Lloyds will now pursue a stock market flotation – a route that many expect RBS will also fall back on once it has assessed the new bidders for its branch networks. Lloyds is just embarking on its own plan B after the Co-operative decided that buying 632 of its branches was too much trouble in the current economic and regulatory climate. ![]() RBS is already on its second attempt to rid itself of 316 branches after Spanish bank Santander pulled out of takeover talks. First, the two bailed-out banks, Royal Bank of Scotland and Lloyds Banking Group, are under instruction from Brussels to sell off bundles of branches in return for the whopping £65bn of taxpayer cash they received.
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