We shall all be paying close attention tomorrow to see what’s in the Budget for us, but one measure we’re unlikely to see is the announcement that the Government has decided to sell the public stake in this disastrous entity called a bank.
As the latest results for this albatross outfit which is owned 72% by the British taxpayer makes such dismal reading, serious thought must now be given to selling off the disaster. In February its chief executive announced that he would take his £1m bonus for last year and that the bank will pay out total bonuses of £343M!
This is despite racking up its ninth year of losses, some £7bn! We are told that the so called bank will return to the black next year despite potentially high cost legal claims by the US Dept of Justice. There will also have to be severe cost-cutting, job losses and branch closures. In view of RBS’s track record, why should we believe that it will turn the corner by 2018? What other unanticipated disasters may be looming? The total losses made by RBS since 2008 amount to a staggering £58bn!
There have been previous calls to sell off the public stake in RBS which according to some estimates would bring in £20bn. It has also been suggested that this money should go to help the NHS or to help buffer the impact of Brexit.
However, a more sensible course would be to use the £20bn raised from a sale to establish a ‘State Mortgage Lending Corporation’. The money would then remain in the lending sector and could be utilised by say, first time borrowers to secure loans for housing on better and possibly softer terms than they can currently obtain from a high street lender. Builders may also be able to obtain loans on easier conditions for low cost housing.
While it made good sense for the nation to bail RBS out of its misery in the 2008 financial crisis for the common good, now is the time to divest.
Think again Chancellor.