The Chancellor’s announcement that he would start selling RBS shares at a loss caused the biggest stir in a fairly meaty speech yesterday at the Mansion House. His convoluted arithmetic that overall the taxpayer had made a profit out of the bank rescue programme was a pointless argument; not least because had the banks not been rescued most taxpayers would have lost most of what they possessed.It was not a project aimed at profit. It was one of survival.
He was right to say that the value now is the value which counts and that value will increase faster if the market sees a road open to the return to the private sector. The gradual break-up of more of this vulgar pipe dream to build a financial institution bigger than Great Britain itself in financial terms, will also make sense as time goes on. One thinks of Nat West and Coutts being taken out of a conglomerate which has bought these two respected banks nothing but grief.
As for the value Labour in government paid much could be said. It was too much but it is doubtful, very, that Osborne faced with a crisis beyond imagining in which both the Bank of England and the City regulators had entirely lost control, would have paid less. Indeed the reverse is possible. What is clear with hindsight is that the taxpayer should have acquired all of the shares for a total sum of £1, as the bank was completely bust, much of its balance sheet’s asset portfolio was worthless and the bank’s liabilities far exceeded any value which could be scraped together to set against them. No doubt the calamitous impact on pension and savings funds invested in this monstrosity, if shareholders had lost everything, and the knock on effects which would have followed, were factors in setting the price at the level chosen in the heat of that unprecedented hour.