Royal Bank of Scotland

Lord Davies of Oldham Excerpts

Tuesday 5th June 2018 Lords Chamber

[Lord Bates]

I thank the noble Baroness for her questions. In response to the first one, it must be remembered that when the Government paid £5.02 per share for RBS in 2008 it was an essential injection of capital at a time of financial crisis. The bank whose shares we sold yesterday is a very different organisation. Its balance sheet is £1.5 trillion less. It is operating in nine countries instead of 38. Because we have changed the rules, its capital buffer is now 15.1%, which is greater than it was and well above the threshold required. The noble Baroness also touches on some other important factors. These had a bearing on UK Government Investments, which advised the Government about when to sell—we act on advice in these things. It pointed to the fact that, because a settlement of £3.6 billion with the Department of Justice in the United States, announced in early May, had now happened, it judged this to be a good time to exercise this sale. The Financial Conduct Authority rightly looked into the global restructuring group, where the circumstances are very concerning for the businesses affected. Its report recognised that a number of that group’s customers had been mistreated.

[Lord Davies of Oldham (Lab)]

My Lords, the Minister has made a good fist of a very poor case indeed. He must recognise that the bank is, in fact, being sold at a level massively below its value when it was bailed out in 2008. It is, therefore, the taxpayer who is bearing the cost of this situation. It will not do for the Government to say: “We now have a bank which can pay a dividend and which has made progress. We are therefore delighted to be able to sell it into private ownership, while the public which bailed it out loses significantly on the deal”.

[Lord Bates]

The noble Lord may say that we sold it too cheaply; I might say that he bought it too high, which is another way of looking at the £5.02. It is a fundamentally different bank to the one which was acquired then. The price which we sold at yesterday—271p—was near the top end of the present yearly average. We have signalled that we do not believe that a Government should be in the business of running these banks. The Chancellor announced in last year’s Autumn Budget that we would gradually dispose of our interest in the bank over the next five years, and that is what we are doing.