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Option to issue RBS sharesto UK citizens remains “open”.
Vince Cable, the UK’s Business Secretary, has argued that government-held Royal Bank of Scotland shares could be divided amongst UK citizens.
Speaking in an interview with the BBC Dr Cable said whilst there was “no immediate prospect” of the troubled bank returning to the private sector that he wants to the option of issuing shares to UK citizens to kept “alive”.
During the banking crisis of 2008 the then UK government acquired an 81% stake in RBS to prevent it from collapsing, along with a 43.4% stake in the Lloyd’s Banking Group.
Stating that RBS “could be mutualised, shares given to the public” Dr Cable was advocating a policy supported by his party, the Liberal Democrats, rather than the official position of the UK government, in which the Liberal Democrats are the junior partner in coalition with the Conservatives.
The Business Secretary said all options for the bank were “open and we haven’t foreclosed on any of them” and that it could also “remain in semi-public ownership for a prolonged period of time” or “be reprivatised when the positions are better.”
Dr Cable argued that the government’s initial plans to re-privatise the banks were no longer feasible, saying that “Recapitalisation may be the best solution but it is currently impractical; full nationalisation would cost the taxpayer billions and, except in a new financial emergency, this is unlikely to take precedence over other claims on spending”.
Commenting on the £400m fine that Royal Bank of Scotland is expected to receive for its role in the Libor scandal the Business secretary said that the “problem is that these are global banks and if they’ve committed breaches of the law in the US they have to be punished accordingly”.
Dr Cable insisted that the fine should be paid from funds intended for bonuses and not from taxpayers or customers, saying “it is absolutely galling for UK taxpayers to be asked to stump up for it” but said the government was not in a position to force the bank to make such a decision.
In a statement RBS said it was in “late-stage settlement discussions” with UK and US authorities regarding fines, but accepted that whilst “settlements remain to be agreed, RBS expects they will include the payment of significant penalties as well as certain other sanctions”.
UPDATES:
13:28 – RBS has been fined a total of £390m, including £87.5m to the UK’s Financial Standards Authority and over £300 to US regulators.
15:19 – Stephen Hester, RBS chief exectutive, has announced it will pay the £390m of Libor fines from its bonus pool, as Vince Cable had previously suggested.
