Royal Bank of Scotland

Lord Davies of Oldham Excerpts

Wednesday 1st July 2015 Lords Chamber

[Lord Ashton of Hyde]

My Lords, it was never the intention of the Government to be a permanent investor in the UK banking sector. At a national level, both RBS and Lloyds are already in the process of divesting part of their UK banking businesses. The Government do not believe that the case for breaking up the core operations of any bank in which the Government have a stake into regional entities meets the objectives of maximising the bank’s ability to support the British economy, getting the best value for the taxpayer or facilitating a return to private ownership. The cost of reorganisation would be attributable to the banks and, as a result, would be fully borne by the taxpayer. The significant issue is the trade-off between the costs, which are certain and significant, and the benefits, which are uncertain.

[Lord Davies of Oldham (Lab)]

But, my Lords, as the Minister has just indicated, the bank is involved in restructuring at present and is still awaiting a judgment in the United States on the mis-selling of subprime mortgages—which takes us back a little while. How can the Government think in terms of having an early timetable for the selling off of this bank? The bank is now trading a long way below the price that the Government paid for it in 2008. Will that not mean that there will be a distinct and significant loss to the taxpayer?

[Lord Ashton of Hyde]

My Lords, I made no criticism of the Labour Government when they bailed out RBS and made no criticism of the average price that they paid. But of course it is part of the mathematics of selling the bank for a loss that they paid 502p. As to the present price and whether it is being discounted, it is true that there is a law suit from the FHFA in the United States, but our independent advice is that the current share price fully reflects the concerns about any future law suits in that regard.