George Osborne Says British Government to Begin Selling RBS Shares

By Margot Patrick 

LONDON--The U.K. government will start selling shares in Royal Bank of Scotland Group PLC within months in a long-anticipated but highly-symbolic move to show the country has moved on from the financial crisis.

Chancellor George Osborne in his annual Mansion House speech on Wednesday said that starting to sell RBS shares, even at a loss, "is the right thing to do" for taxpayers and the economy and that the Bank of England and independent adviser Rothschild have blessed the plan.

The British government stake is worth 32.1 billion pounds ($49.2 billion).

"From bailing out the banks to bringing them back from the brink, now is the time for RBS to rebuild itself as a commercial bank no longer reliant on the state, but serving the working people of Britain," Mr. Osborne said in prepared statements for the speech.

The government spent GBP45.5 billion to bail out RBS in the financial crisis, after a disastrous acquisition of Dutch banking group ABN Amro nearly caused the bank to collapse. The emergency funds have sat at the bank for nearly seven years, as a prolonged recession, an onslaught of regulatory fines and political squabbles over the bank's strategy held back its recovery.

Mr. Osborne said he had sought guidance on the RBS share sale plan from Bank of England Governor Mark Carney, who in a letter on Wednesday agreed the plan should go ahead now to "promote financial stability, a more competitive banking sector and the interests of the wider economy."

There had been anticipation in recent months that the government was preparing to start selling the shares. In March, Mr. Osborne said he wanted to get moving on the privatization in the summer, following the country's general election last month that returned the Conservative Party to power.

Selling the shares will underline the government's view that an economic recovery has taken hold in Britain and that its banking system has been significantly strengthened. The U.K. was hit harder than most countries in the crisis of 2008 and 2009 because of the bank bailouts and its reliance on financial services for economic growth.

Jason Douglas contributed to this article.

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