THE idea of a 1980s “Tell Sid”-style re-privatisation of Royal Bank of Scotland and Lloyds Banking Group won’t go away, and it is clear it is under serious consideration by the UK government.
There are too many leaks around the Treasury think tank interface for any other inference to be taken.
When the media floats such an idea, it is often vaguely disparaged as kite-flying: yet when a government lets the concept feel the fresh air then it is taking appropriate stock of how it would be received.
The latest momentum to the idea of a mass sale to the public of shares in the two bailed-out banks has gained fresh impetus from it apparently being thought a spiffing idea by George Osborne’s favourite think-tank, the Policy Exchange.
Neil O’Brien is a former Policy Exchange director who now advises the Chancellor.
It is also understood that Sajid Javid, the Treasury minister responsible for the state-controlled banks, is also far from dismissing the idea of a “Tell Sid” – patent British Gas, 1986 – campaign out of hand.
However, a pause for thought might be advisable even if the idea of a sale to the public of shares in Lloyds and RBS is politically enticing to a coalition government under mounting electoral pressure.
The logistics of such an exercise would be highly challenging. The RBS chairman, Sir Philip Hampton, has touched on this previously.
There have been suggestions that the European Commission may also have some objections if a taxpayer bail-out leads to largesse only to UK shareholders.
And there is no guarantee that the move would get back the £60 billion-plus for the taxpayer that we threw as an emergency lifeline to the two banks as the financial system looked into the abyss in 2008.
Cynically, a big share handout could be viewed as a way for Osborne to unload two unwanted lightning rods for criticism by allowing retail shareholders to share in some upside at Lloyds and RBS in the long-term, while not needing to get the taxpayers’ money back in the short-to-medium term.
There is a sense here of government policy being made up on the hoof – surely not.
It is easily arguable that a better, less complicated and uncertain way forward would be for RBS to complete its five-year recovery next year, begin selling off tranches of shares to institutional investors, probably initially at a loss to the taxpayer buy-in price, but over several years at an ultimate gain.
It should also be remembered that the US authorities did not get American taxpayers’ money back from their bank bail-outs much quicker than we have managed through any “Tell Gus”-type strategy.
Buffett will avoid limbo by not naming new boss
BILLIONAIRE stock picker Warren Buffett has revealed that the board of Berkshire Hathaway has decided who his successor as chief executive will be when the 82-year-old eventually hangs up his calculator – but is not saying for now.
This is smart, and no less than you would expect of the “Sage of Omaha”. Announce your successor when you quit, not before, as any interim period between the boss and his successor may result in a sense of limbo at Berkshire, one of the most successful investment vehicles of all time.
Is the Scottish Rugby Union thinking the same thing by appointing a new national team head coach but not telling us until the end of the month?