UK state raises US$3.3b from first sale of RBS stake

The United Kingdom government said Tuesday it sold 5.4 per cent of taxpayer-owned Royal Bank of Scotland for £2.1 billion (US$3.3 billion) as it begins to shed a majority stake acquired at the height of the financial crisis in 2008.

The Treasury sold the shares for 330 pence each, or 2.3 per cent less than Monday's closing price.

Though RBS's shares are trading at far less than the 502 pence that the government paid for them, analysts suggest that selling a small piece of the government holding now will make it easier and more profitable to sell the rest in the future.

"This is an important first step in returning the bank to private ownership, which is the right thing to do for the taxpayer and British businesses," Treasury chief George Osborne said.

The government pumped £45.8 billion into RBS to keep the bank afloat, acquiring a stake of about 80 per cent. Tuesday's sale puts the government stake at about 73 per cent.

"It's an important moment and reflects the progress we are making to become a stronger, simpler and fairer bank," said Ross McEwan, the CEO of RBS. "There is more work to be done but we're determined to build a bank the country can be proud of."

The proceeds will be used to pay down the national debt.

Shore Capital analyst Gary Greenwood underscored that this was only the start.

"While this share sale represents an important milestone for the group, and perhaps signifies that political risk associated with the stock is reducing, we still anticipate that it will still be a number of years before the government fully exits its shareholding," he said.

- AP