RBS Stake Sale May Be Delayed by Italian Turmoil, CFO Says

(Bloomberg) -- The market turmoil in Italy could prolong the U.K. government’s plan to sell its majority stake in Royal Bank of Scotland Group Plc, according to outgoing Chief Financial Officer Ewen Stevenson.

Stevenson, speaking on the sidelines of RBS’s annual shareholder meeting in Edinburgh on Wednesday, said he would be “surprised” if the government were to start divesting its holding soon. The state, which controls about 70 percent of the lender, has considered selling its stake sooner than its March 2019 target if market conditions are favorable, people familiar with the matter said earlier this month.

“You have seen what we have done over the last four, five years, the amount of stuff we have been cleaned up at the bank,” said Stevenson, who announced his surprise departure from RBS earlier Wednesday. “The bank is back in great shape, ready to be privatized,” he said referring to the government’s longer-term plan to exit its shareholding.

During the financial crisis the U.K. government injected 45.5 billion pounds ($60.5 billion) into RBS, then the biggest banking bailout in the world. In a milestone for the company, RBS this month reached a $4.9 billion preliminary settlement with the U.S. Department of Justice over mortgage bonds, clearing the path for the lender to resume dividends and thereby raise its appeal to investors.

Chief Executive Officer Ross McEwan also said at the meeting it’s in the hands of the government to decide upon the timing of the sale and that the bank has yet to start talks with regulators about plans to resume dividends.

Political chaos in Italy has spooked investors this week, triggering fears that the euro zone’s third-biggest economy may leave the currency bloc and memories of the continent’s debt crisis several years ago.

©2018 Bloomberg L.P.