Sale of taxpayer stake in RBS on hold over US fines

The taxpayer's stake in Royal Bank of Scotland will not be sold until the lender spins off Williams & Glyn and tackles a hefty fine from US authorities, MPS heard yesterday.

UKFI said investors want 'more clarity' before buying shares in RBS. Picture: John Devlin

UK Financial Investments (UKFI), which manages the public’s 72 per cent stake in RBS, said investors would be reluctant to snap up the bank’s stock at present because there is too much uncertainty over the two issues.

Edinburgh-based RBS is awaiting on a settlement figure from the US Department of Justice following a probe into the way it sold residential mortgage-backed securities (RMBS) in the lead up to the 2008 financial crisis.

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UKFI chairman James Leigh Pemberton said the financial markets are speculating that RBS may be hit with a fine of anywhere between $5 billion (£4bn) and $12bn, but that is not a view held by the organisation.

It comes after RBS said last month it is likely to miss the 2017 deadline to sell off Williams & Glyn, but it is still in discussions with a number of interested parties.

Speaking to the Treasury select committee, UKFI chief executive Oliver Holbourn said it is “very difficult” to say when it could start selling shares again in RBS.

“There are really two big issues that investors want more clarity on now before we think they will be willing to buy shares in sufficient size,” he said.

“Those two issues are the RMBS litigation in the United States and also the situation with Williams & Glyn. As the Chancellor has said on the fringes of the IMF, the sensible thing to do is to wait until those two issues are out of the way.”