16th Mar 2016 14:25
LONDON (Alliance News) - The UK government on Wednesday lowered its guidance on how much money can be generated from selling down its 73% stake in Royal Bank of Scotland Group PLC.
The government now expects to raise "up to" GBP25 billion from RBS by the end of 2019-20, a figure which takes into account planned share sales and the GBP1.2 billion fee the bank must pay to retire an instrument that currently prevents it from paying dividends.
The guidance was given in the document for UK Chancellor George Osborne's 2016 Budget, which he presented earlier on Wednesday to fellow lawmakers in Parliament.
In Osborne's Autumn Statement for 2015, delivered in November, the government had guided that it would sell "over" GBP25.0 billion of RBS shares over the course of this Parliament and raise a further GBP5.8 billion in 2020-21.
The government raised GBP2.1 billion from selling a 5.4% stake in RBS in August 2015 at 330.0 pence per share. RBS shares were trading at 235.00p on Wednesday, up 0.1% on the day but down 23% to date in 2016. Wednesday's price gives RBS a market cap of GBP27.33 billion, giving the government's 73% stake a value of just under GBP20 billion.
The document also reiterated the government's commitment to selling shares in Lloyds Banking Group PLC to retail investors. The retail sale was delayed due to general weakness in the banking sector shares, amid fears about slowing economic growth and negative interest rates.
The government said it wants to return Lloyds to full private ownership in 2016-17. It still owns 9.2% of the bank. Shares in Lloyds were flat at 69.22p on Wednesday afternoon.
By Samuel Agini; [email protected]; @samuelagini
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