Risk of mega-fines holds back RBS privatisation
Bailed-outbank RBS is almost ready to be privatised, but the risk of major fines is stopping a large scale share sale, UK Financial Investments’ (UKFI) bosses told MPs yesterday.
The government still owns 80 per cent of the bank and has yet to begin selling up – in contrast with Lloyds, where it has sold half its holdings.
“Institutional investors have said that [RBS chief] Ross McEwan has made a lot of progress making a simpler, better bank,” UKFI’s head of capital markets Oliver Holbourn told the Treasury Select Committee of MPs. “More clarity is needed on conduct and litigation costs – the size of the issue is unknowable – before we feel we can deliver a good outcome for the taxpayer.”
“Our starting position acknowledged it was in the shareholder interest on commercial grounds that a two-to-one proposal be put to shareholders,” Leigh-Pemberton said. “RBS made it clear to us that there could arise risks to retention and risks to attraction of new employees from them being an outlier in this regard.”
EU rules limit bonuses at the same level as salaries unless shareholders agree to double that cap.
“It is clear from Mr Leigh-Pemberton’s evidence on RBS’ bonus decision that the government’s intervention in the running of the company is substantial,” said committee chairman Andrew Tyrie, arguing that UKFI should be re-absorbed into the Treasury formally.
Source: cityam- Risk of mega-fines holds back RBS privatisation
