U.K. Sells $3.3 Billion RBS Stake, After Crisis-Era Bailout

(Bloomberg) -- The British government sold a 2.5 billion pound ($3.3 billion) stake in Royal Bank of Scotland Group Plc, reducing its majority holding a decade after it bailed out the lender during the financial crisis.

The state sold 7.7 percent in the lender at 271 pence per share to institutional investors, it said in a statement on Tuesday. Shares in the Edinburgh-based bank fell 3.4 percent to 271.40 pence at 8:47 a.m. in London trading.

“I am pleased that the government has decided the time is now right to re-start the share sale process,” RBS Chief Executive Officer Ross McEwan in a statement. “This is an important moment for RBS and an important step in returning the bank to private ownership.”

The divestment is the first since 2015 and comes after the Edinburgh-based bank reached a preliminary settlement with U.S. authorities over the sale of toxic mortgage bonds, which had been weighing on the firm’s valuation. The sale of 925 million shares will reduce the state holding to 62.4 percent from 70.1 percent, according to a statement from the government.

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

CFO Departure

The U.K. hired four U.S.-based banks to sell the shares: Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley. The government has said it plans to sell about 15 billion pounds of stock over five years in equal portions of 3 billion pounds.

The government’s last sale of RBS stock was in August 2015, when George Osborne was Britain’s finance minister and Brexit had yet to roil markets. That 2.1 billion-pound sale of a 5.4 percent stake was at 330 pence, while the stock currently trades at 280.9 pence. The government has previously indicated its break-even price on the sums injected into the bank is 407 pence a share.

Separately, the bank said last week that its chief financial officer, Ewen Stevenson, seen as a potential successor to the chief executive officer, would leave the company to pursue another opportunity. A search for a new CEO has intensified after the mortgage settlement as Ross McEwan may leave as early as next year, people familiar with the discussions have told Bloomberg.

©2018 Bloomberg L.P.

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