This week began with the announcement that 7.7% of the UK Governments’ stake in the Royal Bank of Scotland (RBS) was to be sold back into private hands.
When the 2008 financial crisis struck, the Government bought up 925 million shares in the bank at 502p each in order to avoid what was then an imminent collapse of the world’s largest bank.
The sale has now left the Government, and consequently the taxpayer, with a loss of £2.1 billion. Understandably, some have criticised whether this was the right time to make this move. The Guardian has noted that “Ministers believe there is no realistic prospect of the share price of RBS – much-reduced in size since the bailout – reaching 502p any time soon and that the cash raised from reducing its stake from just over 70% to 62.4% could be more usefully spent elsewhere.”
Just a week earlier, the now former chief financial officer for RBS, Ewen Stevenson, was reported in The Telegraph as claiming that now was not the “optimal” time for the reprivatisation of the bank. Despite being asked for comment, UK Government Investments who held the shares declined to provide comment on what in hindsight appears to have been its plan at the time.
Although the move is being touted as a step in the right direction and a positive sign of recovery, some investors are still wary. The Telegraph notes that some have expressed concern over the scandal concerning the bank’s Global Restructuring Group (GRG). Given the recent news that Clifford Chance are to face investigation from the legal regulator for their role in reviewing GRG, some are concerned that the mistreatment carried out has “not been fully unearthed”.
As many will be all too familiar with the GRG, they are being faced with allegations that it engineered the failure of thousands of businesses in an attempt to strip them for assets to improve RBS’s struggling balance sheets. This led to the instatement of a review process for disgruntled customers and the bank setting aside a £400 million fund for compensation.
If you have been affected by the actions of RBS or GRG then please feel free to get in touch. Seneca Banking Consultants are experts in seeking compensation for the wrongful actions of UK banks and are here to help with your complaint. Please call us on 01201 322 805.