Tuesday, 27 March 2012

Selling off the family silver.

Greetings!
As you are aware, we all own an 82% share of the Royal Bank of Scotland.  We paid £45.5 billion for the privilege.  We had to 'step in' when RBS ran out of money and was in danger of collapsing and leaving the management with very red faces indeed.  The price we paid was when the bank shares traded at approximately 50 pence a share.  Currently, we have been rumoured to be in negotiations with Abu Dhabi for them to purchase up to a third of the Governments share of RBS at the current price of about 25 pence a share.
The Government has long stated that it is not in the bank-owning business and would like to dispose of the RBS shares back to the private sector, where they belong.  Nationalisation has not been in fashion for a long time.
If this deal goes through, the Government will get back 1 million pounds for every 2 million pounds it invested in RBS on our behalf.  Any way that you look at this deal, the figures do not add up.  They make even less sense when you think that we are in a recession and lots of people have lost their jobs.
Of course the Government is hoping that once they signal that RBS shares are being sold, that will mean that the price of the shares will rise.  Hopefully, that will be true, but will they rise to such a point where they are sold at a break-even price?  That is more than double the current price - I think not!
The other benefit to this Government of selling the RBS shares is that the management of the bank can pay themselves fantastic bonuses for working for RBS.  Remember the noise that was made about Stephen Hester's (CEO of RBS) £1 million bonus, and there was the probability that the issue would be discussed in Parliament! When RBS is in private hands we will be told that is is 'none of our concern'.
So once again, this Government is selling off our assets at knock-down prices to their 'buddies' in the private sector.
Champers all round!

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