Former RBS chief urges Osborne to sell off bank to benefit taxpayer

Stephen Hester urged the Government to start selling its stake in the bailed-out lender as soon as possible to get the best possible return for the UK taxpayer.

But Chancellor George Osborne said yesterday that RBS is “unlikely” to be sold back to the private sector before the 2015 general election.

The bank was the subject of three reports published yesterday, one revealing plans for the rapid wind-down of toxic loans while slashing costs, another one detailing its performance between July and September and a third criticising the bank’s lending to small and medium-sized businesses.

Speaking at the Yorkshire Post Excellence in Business Awards on Thursday night, Mr Hester said: “RBS is strong enough to be privatised now. The state should average its value.

“The later share sales will be higher than nearer ones, but RBS will be worth less if public ownership lasts for much longer. It’s in everyone’s interests. RBS will serve the economy and will pay back taxpayers better the sooner an amicable split from Government can take place.”

The Government began selling shares in Lloyds at a profit earlier this year, but a sale of its 81 per cent stake in RBS is much further off, with taxpayers still sitting on a paper loss of nearly £14bn.

RBS is to create an internal “bad bank” to fence off its riskiest assets, part of measures designed to heal its relationship with Ministers and speed up its sale. The Government said the restructuring would enable it focus on lending to households and small and medium-sized businesses, but critics called it “a cosmetic exercise”.

Shares closed six per cent down.

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