RBS – Everyone’s a Winner!

Thursday, August 6, 2009
By SHP

Well done!  As an investor in RBS, you – Mr or Mrs Taxpayer – are in the money.

It looked a bit iffy for a while, what with that nasty Commons Select Committee making the old board look stupid, and the cautious noises coming from new CEO Stephen Hester, but as the RBS share price powered above 51p to its highest level in seven months, UK Financial Investments, the Government’s holding company for it’s bank stakes, was making a paper profit.

If the Government were to follow my example in share trading, they would be making smug noises right about now, working out how much higher it needs to go for them to buy a speedboat (or in their case, maybe a couple of hundred schools or hospitals), and then holding on until the next enormous crash, before sobbing about what could have been and burning their speedboat catalogues (can you get school or hospital catalogues?).

Fortunately for us taxpayers, the government has made clear it’s commitment to their stake in RBS – a massive 36.9bn shares, or 70% of the company – being as short-term a holding as is sensible.

In the real world, a large shareholder offloading a big stake in a company would be awful news, the share price would plummet and the investment banks would be scrabbling to place the holding with willing buyers, usually at a big discount.

For RBS though, the usual rules may not necessarily apply.

If the government decides to offload part of their stake, the market would most likely view this as a positive move, as it will indicate confidence that the company is well on the way to recovery.

For long-suffering RBS shareholders, this is good to hear, but the likelihood of a return to previous levels remains a pipe dream.  Even a year ago, the shares were above £2. 

RBS interim results for 2009 are due to be reported on Friday 7th August.

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