![]() To raise 15 billion pounds, the government would need to sell its 8.4 billion RBS shares for at least 178 pence each. Moreover, Hammond has given himself some wiggle room. RBS is trading at just below its tangible book value, even though it is expected to deliver a return on equity of around 6 percent next year – below the bank’s likely cost of capital. However, Hammond is unlikely to face accusations of selling too cheaply. Even though the shares are up 21 percent so far this year, the state’s 70 percent shareholding is worth about 23 billion pounds. The government is unlikely to ever fully recover the 46 billion pounds it pumped into RBS during the 2008 financial crisis. Pencilling in 15 billion pounds of proceeds from RBS means net debt is projected to start falling in the fiscal year to March 2019, according to the Office for Budget Responsibility. But he also needs to win back voters who deserted the Conservative government in this year’s election, through policies such as subsidising housing purchases for first-time buyers. The minister known as “Spreadsheet Phil” has promised to bring Britain’s national debt, currently 86 percent of GDP, under control. Hammond’s plan to privatise RBS reflects an awkward balancing act. He could achieve that even if RBS shares tumble 30 percent, Breakingviews calculates. ![]() Chancellor Philip Hammond intends to raise 15 billion pounds to meet fiscal targets by selling the state’s holding in the UK lender. LONDON (Reuters Breakingviews) - The British government’s Royal Bank of Scotland sale looks priced for a messy Brexit. A man walks past a branch of The Royal Bank of Scotland (RBS) in central London August 27, 2014
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