The UK government is keen on recovering the cost of bailing out the Royal Bank of Scotland Group Plc. The pegged price is 19% lower than what the government had shelled out to RBS back in 2008. This was all confirmed by individuals familiar with the transaction.
The government would be able to break even on its emergency investment at 407 pence per share compared to the valuation of 502 pence per share during the height of the crisis. This higher valuation is due to the fees paid out by RBS to the Treasury to release the funds and other program costs during the bailout.
The proceeds from the sale would be used to fund tax cuts according to Chancellor of the Exchequer George Osborne. RBS CEO Stephen Hester confirmed that RBS received the largest banking bailout package in the world and is forecasting that by 2015, the banking institution would be returned to private ownership.
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