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| Version 6 | Version 7 |
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| 'Challenge' to sell bank stakes | 'Challenge' to sell bank stakes |
| (about 1 hour later) | |
| The organisation set up to manage taxpayers' stakes in nationalised banks has said it will be "challenging" to sell them back to the private sector. | |
| UK Financial Investments (UKFI) was set up to manage taxpayers' shareholdings in Royal Bank of Scotland and Lloyds after they had to be rescued. | UK Financial Investments (UKFI) was set up to manage taxpayers' shareholdings in Royal Bank of Scotland and Lloyds after they had to be rescued. |
| That investment is now valued at £60bn, UFKI said, which is the equivalent of £3,000 per household. | That investment is now valued at £60bn, UFKI said, which is the equivalent of £3,000 per household. |
| If UKFI sold the shares now it would make a loss of £10.9bn, it said. | If UKFI sold the shares now it would make a loss of £10.9bn, it said. |
| That loss, due to the fall in the value of the banks shares and investments, is less than the £18.1bn shortfall registered in February. | That loss, due to the fall in the value of the banks shares and investments, is less than the £18.1bn shortfall registered in February. |
| UKFI said: "Our own task of returning these investments to the private sector is challenging. | |
| "The amounts involved are very large, and a successful disposal of our holdings will require professionalism and patience. | |
| "We all have a stake in UKFI's success. Skilled disposal of these investments will recoup tens of billions of pounds for the taxpayer." | |
| UKFI said it was not possible to say what share price would trigger a sale. | |
| 'Patient and professional' | |
| FROM THE WORLD AT ONE More from The World At One | |
| "I would not be at all surprised to see some transactions occurring within a year or so... and continuing over the next several years, " Glen Moreno, acting chairman of UKFI told BBC Radio 4's World at One programme. | |
| "It won't happen quickly, but it might happen steadily and our interest will gradually decline." | |
| He said the important thing was that UKFI established firstly "that the economic environment become positive so that the banks can be restored to profitability". | |
| He said that it would then be a matter of a "patient and professional disposal of shares" - probably in a public market. | |
| "It won't happen quickly, but it might happen reasonably steadily and our position will then gradually decline," he said. | |
| 'Big mouthful' | 'Big mouthful' |
| In its annual report, UKFI referred to the £60bn stakeholding as "a very large sum". | |
| "If, as seems likely, our opportunities to sell shares will emerge as conditions improve and shares prices rise, the value of our investments we will be bringing to the market could be higher still," it added. | "If, as seems likely, our opportunities to sell shares will emerge as conditions improve and shares prices rise, the value of our investments we will be bringing to the market could be higher still," it added. |
| These banks belong to us, to taxpayers, and the monetary value of our investment in this duo is huge BBC business editor Robert Peston Read Robert's blog here | These banks belong to us, to taxpayers, and the monetary value of our investment in this duo is huge BBC business editor Robert Peston Read Robert's blog here |
| BBC business editor Robert Peston said the sale of such a large holding could "not be done overnight - that's just too big a mouthful for investors to swallow quickly". | BBC business editor Robert Peston said the sale of such a large holding could "not be done overnight - that's just too big a mouthful for investors to swallow quickly". |
| He said that in the history of Europe there had only been three occasions when banks - or indeed any companies - had sold shares worth more than £10bn to commercial investors in a single exercise. | He said that in the history of Europe there had only been three occasions when banks - or indeed any companies - had sold shares worth more than £10bn to commercial investors in a single exercise. |
| These were share sales by HSBC, RBS and UBS - all carried out in 2008 and 2009.Salary package | These were share sales by HSBC, RBS and UBS - all carried out in 2008 and 2009.Salary package |
| But UKFI, which has reiterated that it will operate at arms length from the government, said it would "maximise" the value of the investments for the taxpayer. | But UKFI, which has reiterated that it will operate at arms length from the government, said it would "maximise" the value of the investments for the taxpayer. |
| It also said it would not interfere in the day-to-day running of the banks, but engage strongly on strategic issues. | It also said it would not interfere in the day-to-day running of the banks, but engage strongly on strategic issues. |
| There was anger this year when it emerged that the government was not going to step in to prevent new RBS chief executive Stephen Hester from receiving a salary package worth up to £9.6m. | There was anger this year when it emerged that the government was not going to step in to prevent new RBS chief executive Stephen Hester from receiving a salary package worth up to £9.6m. |
| Questions have been asked about the appropriate level of pay at a bank that has received billions in taxpayer support. | Questions have been asked about the appropriate level of pay at a bank that has received billions in taxpayer support. |
| Officials, when questioned at a briefing following the release of the UKFI report, indicated that they believed RBS had to pay the rate necessary to ensure it got the best possible talent. | Officials, when questioned at a briefing following the release of the UKFI report, indicated that they believed RBS had to pay the rate necessary to ensure it got the best possible talent. |
| 'Strengthened' | 'Strengthened' |
| UKFI DEFENDS £10m SALARY Steve Schifferes, Business reporter, BBC News | UKFI DEFENDS £10m SALARY Steve Schifferes, Business reporter, BBC News |
| The UKFI has strongly defended its decision to offer RBS chief executive Stephen Hester a near-£10m pay packet including bonuses. | The UKFI has strongly defended its decision to offer RBS chief executive Stephen Hester a near-£10m pay packet including bonuses. |
| It is understood that UKFI was consulted over this matter by the RBS board of management. | It is understood that UKFI was consulted over this matter by the RBS board of management. |
| It took the view that RBS had to pay a commercial rate to its chief executive in order to ensure that the firm got the best possible talent. | It took the view that RBS had to pay a commercial rate to its chief executive in order to ensure that the firm got the best possible talent. |
| And that was the best way to ensure that the taxpayer eventually got back its huge investment in RBS. | And that was the best way to ensure that the taxpayer eventually got back its huge investment in RBS. |
| In relation to Lloyds, it is understood UKFI was a strong supporter of the decision by chairman Victor Blank - the architect of the merger with HBOS - to stand down early, despite his closeness to the Prime Minister. | In relation to Lloyds, it is understood UKFI was a strong supporter of the decision by chairman Victor Blank - the architect of the merger with HBOS - to stand down early, despite his closeness to the Prime Minister. |
| It is believed that UKFI is a strong supporter of the current chief executive Eric Daniels, who has also come in for criticism from some investors | It is believed that UKFI is a strong supporter of the current chief executive Eric Daniels, who has also come in for criticism from some investors |
| "Today UKFI is setting out our strategy to deliver on the tasks we have been given: maximising the value of these investments for the taxpayer, and returning the banks as strengthened institutions to full private ownership over time." | "Today UKFI is setting out our strategy to deliver on the tasks we have been given: maximising the value of these investments for the taxpayer, and returning the banks as strengthened institutions to full private ownership over time." |
| UKFI did not set out any fixed timetable for disposing of the shares, but said it expected "to undertake a number of capital markets transactions over a sustained period". | UKFI did not set out any fixed timetable for disposing of the shares, but said it expected "to undertake a number of capital markets transactions over a sustained period". |
| Robert Peston said that the stakes could not be sold off right away, and that the government would "stick with these stakes for a considerable amount of time". | Robert Peston said that the stakes could not be sold off right away, and that the government would "stick with these stakes for a considerable amount of time". |
| He also said that at current market prices "the value of the UKFI-managed investments in these banks will be around £60bn". | He also said that at current market prices "the value of the UKFI-managed investments in these banks will be around £60bn". |
| "And, for the avoidance of doubt, if we sold at £60bn we would be selling at a loss - because the market value of taxpayers' initial stake in the two banks is about £11bn less than we paid for those first holdings." | "And, for the avoidance of doubt, if we sold at £60bn we would be selling at a loss - because the market value of taxpayers' initial stake in the two banks is about £11bn less than we paid for those first holdings." |