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The quango controlling the Government's stakes in British banks today warned it will take years for taxpayers to get their money back as losses on state-owned shares hit £13.2 billion.
UK Financial Investments (UKFI) revealed that every household in Britain has invested more than £3000 in Lloyds Banking Group and Royal Bank of Scotland (RBS) through the part-nationalisation of the banks.
Chief executive John Kingman said that taxpayers “rightly expect to get their money back” but warned it will take “several years” and UKFI should be seen as a “long-term shareholder”.
Acting chairman Glen Moreno, who is working for free, added: “Our 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.”
He added: “Make no mistake: this ain't over yet. Banks still face considerable losses from past excesses and the current recession.
“There is a huge amount of work to be done in our banks. Our long-term task is to maximise value for the taxpayer. This will take time.”
The warning came as it emerged that new RBS chief executive Stephen Hester will face tougher performance targets next year following outrage over his potential pay packet of nearly £10 billion.
The Government last year took a 70% stake in RBS at an average 50.5p a share and a 43% stake in Lloyds at 122.6p to save the banks from collapse.
The shares have since plummeted and were down again today — Lloyds by 1.27p to 62.03p and RBS by 0.21p to 35.45p — leaving the taxpayer sitting on losses of £13.2 billion.
This compares with a deficit of £10.9 billion at the end of June and £18.1 billion in early February, according to the UKFI report and accounts published today.
The weakness of the shares, and the sheer size of the holding, underlined just how long it will take for the UKFI to sell the Government's stake back to private investors.
“Given the size of our holdings and assuming that there might not be a strategic buyer for our stakes in these banks, we might expect to undertake several transactions in each bank's shares and that these will take place over a sustained period,” said Kingman, who is on £143,000 a year.
The Government's stakes in RBS and Lloyds look set to soar to above 80% and 60% respectively when the Asset Protection Scheme sets in. The two banks have insured £585 billion of toxic assets in the Treasury scheme which could push the investment made by the taxpayer to over £60 billion, making it even harder to sell the shares at a profit.
City analysts expect Lloyds to write down another £13 billion of bad debts when it reports results for the first half of the year next month.
Reader views (10)
why is it that when people have debt it has to be paid back back living on the basic stuff. Obviously as a bank this doesnt apply. Is getting your debt paid off not a priority any more. Think this sends out the wrong message. The politicians we vote in should be doing more to get this money back just as the banks would do for Joe Public.
- taff, lothians, 26/04/2010 14:12
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Tell us something we dont already know. Banks will continue to stick two fingers up to us all and still collect mad settlement claims to failed CEOs/Chairmans along with the massive bonuses. As long as we allow it to happen it will and the debt will just take 4-5 generations to pay back rather than the 3-4 now.A great future for all our Children to grow up in and look forward to!
- Mike, London England, 13/07/2009 17:52
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Sam Dickins, you're wrong
- Joe, London, 13/07/2009 16:31
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Sorry if they stop paying bonusses and everyone leaves it will take a lot longer to get the money back. If you don't pay, people won't stay.
- Ed, London, 13/07/2009 15:45
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It will take less time if banks are barred from giving bonuses until such time as they have discharged their debt to the taxpayer. Would they give a windfall gift to someone with an overdraft ?????????.........so "What's sauce for the goose.........."
- Marie Pestano, Worcester Park, 13/07/2009 14:37
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Of course they will, after they've paid themselves bonuses, year on year.
- Wa, Oxfordshire, 13/07/2009 13:45
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Rich screw the poor, old news
- Dac - Ealing, London, 13/07/2009 12:44
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It is probably a function of age but I have some difficulty in understanding 'it will take a long time for tax payers to get their money back?' as a concept let alone as a reality. I am a taxpayer. I did not invest in a bank, the government did because they thought it was the right thing to do , presumable for the benefit of the community. I have no piece of paper that says I have an investment in the bank. Whatever the deal is between the Banks and the Government, I cannot see the day when the government hands over a big (or small)cheque and says 'here you are; we have done well? even after tax.' No, when, and if a sale in whole or in part or a loan repayment comes to the government, that where it stays. Or have I got it wrong? It is misleading to talk about individuals (taxpayers) with a stake in a rescued bank. I suspect for all practical purposes that cash is gone, about as valuable as a dead parrot? Tell me I am wrong.
- Sam Dickins, London, 13/07/2009 12:25
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Took them less than a year to award themselves new and higher bonuses !
- Edouard, Toulouse, France, 13/07/2009 12:00
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"Banks will 'take years' to pay back taxpayers' money"
Old news - This was understood and reported at the time of state intervention.
- Dave Davies, Basingstoke, Hants, 13/07/2009 09:46
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