RBS, Lloyds Stakes May Be Sold by U.K. in 5 Years, Panel Says
February 08, 2010, 11:20 PM ESTBy Robert Hutton
Feb. 9 (Bloomberg) -- British taxpayers may be able to sell their stakes in Royal Bank of Scotland Plc and Lloyds Banking Group Plc in five years, with RBS exiting the government’s asset-insurance program in “two to three years,” a panel of lawmakers reported, citing testimony by Treasury officials.
The report published today by Parliament’s cross-party Public Accounts Committee also cited Treasury officials saying they believe they will make a profit when the government’s stakes in the two banks are sold. It said the measure of “true success” for the privatization will be whether competition in the banking sector is maintained.
“What is highly uncertain is what the Treasury’s actions will eventually cost the taxpayer -- government estimates vary considerably,” committee chairman Edward Leigh, from the opposition Conservatives said in a statement. “Hundreds of billions of pounds are at stake, with much turning on how good a price can be obtained.”
Prime Minister Gordon Brown hasn’t disclosed a plan for the sale of the stakes, which were taken in the wake of the bankruptcy of the 2008 Lehman Brothers Holdings Inc. The Conservative spokesman on Treasury issues, George Osborne, last week declined to “commit to a timetable” to the share sale.
The U.K. bought an 84 percent interest in Edinburgh-based RBS for 45.5 billion pounds ($71.1 billion) and 43 percent of Lloyds for about 20.5 billion pounds.
The report also criticized the Treasury for offering its external advisers on the rescues, Credit Suisse Group AG and Deutsche Bank AG, “success fees” without defining “success.” That risks importing “wholly unacceptable” financial sector bonus practices into the public sector, the lawmakers said.
--Editors: James Hertling, Louis Meixler
To contact the reporters on this story: Robert Hutton in London at rhutton1@bloomberg.net
To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net
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