Waiting game over RBS bail-out cash

Ross McEwan: Stake needs to be sold off in small tranches. Picture: Phil Wilkinson
Ross McEwan: Stake needs to be sold off in small tranches. Picture: Phil Wilkinson
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Royal Bank of Scotland boss Ross McEwan has warned that it may take another decade for taxpayers to get their money back from the bail-out of the bank.

In an interview with a foreign newspaper, McEwan said he thought the UK government’s 81 per cent stake in RBS would have to be sold down in relatively small tranches.

The bank’s share price is still well short of the level needed for the government to break even on its £46 billion investment, and the RBS chief executive suggested that the market would only buy between £5bn and £10bn a year.

It comes as the UK’s main lenders prepare for the results of the Bank of England’s stress tests, due tomorrow. RBS is expected to pass, but its capital buffers are expected to be lower than those of its main rivals.

The bank was left embarrassed last month when it mis-reported its capital ratio following a Europe-wide version of the tests. RBS said originally said it had a ratio of 6.7 per cent, when in fact it only just passed the test, at 5.7 per cent.

The Bank of England’s tests are thought to have been stricter than those of the European regulator. And a report yesterday suggested that the examinations will become tougher still next year, after the models used by lenders to show how they would cope in the test scenarios were questioned.

The only lender expected to fail this year’s tests is the Co-operative Bank, and it is already working through a plan to boost its resilience.

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