IMF calls for swift Lloyds and RBS sale

THE Treasury edged closer to an exit from Lloyds Banking Group and Royal Bank of Scotland today after the International Monetary Fund (IMF) called for a swift sale of its stakes and Britain’s new banking watchdog backed plans to shore up the pair’s capital buffers.

George Osborne attends an IMF press conference today. Picture: Getty

Chancellor George Osborne indicated he was only waiting for the final recommendations from the Parliamentary Commission on Banking Standards, due next month, before formulating privatisation plans.

He said: “Having refocused their business, now is the time for a clear strategy on how to return RBS and Lloyds to the private sector in a way that protects value for the taxpayer.”

In its annual check-up of the UK’s finances, the IMF urged ministers to adopt a “clear strategy” for returning RBS and Lloyds to private ownership.

Meanwhile the Prudential Regulation Authority (PRA) approved plans to raise capital through profits and planned sales of non-core businesses.

The Bank of England recently revealed a £25 billion capital hole among Britain’s lenders and there had been concerns that the state-backed duo would have to resort to issuing shares to plug the gap, making it harder for the taxpayer to break even in a sale.

The PRA has not disclosed how much Lloyds and RBS will have to find, but both banks said they should be able to rely on capital generated from their core businesses and disposals of non-core assets.

Lloyds expects its core capital ratio to be above the industry benchmark of 9 per cent at the end of this year and higher than 10 per cent by the end of 2014.

Chief executive Antonio

Horta-Osorio said: “Our strong capital position enables the group to actively support growth and lending in the UK economy as well as delivering sustainable results for our shareholders.”

The group is selling off a raft of assets, including yesterday off-loading a 15 per cent stake in wealth manager St James’ Place for £40m, leaving it with a 21 per cent holding.

RBS said it would be able to meet its capital requirements through its existing business plan, including the ongoing reduction of its markets business and sale of non-core assets.

Chief executive Stephen Hester said: “We are pleased with momentum towards completing RBS’s return to full financial health. Our balance sheet has been transformed and our core business has plentiful surplus funding to support continued growth in lending.”

Speculation that a sale of Lloyds shares may be imminent has risen in recent weeks after the bank’s shares passed the 61.2p level that the UK government regards as break-even on its £20.5 billion investment.

A sale of shares in RBS would appear to be further away with taxpayers still sitting on a loss of more than £5bn following the bank’s £45.8bn bailout.