LibDems want bank share giveaway

7th Mar 2011 12:01

The UK taxpayer's stakes in Lloyds Banking and Royal Bank of Scotland could be given away free to the British public under proposals unveiled by the Liberal Democrats.The UK taxpayer acquired 84% of RBS and 43% of Lloyds as a result of a series of bail-outs, totalling £66bn, during the worst of the 2008/09 credit crunch.But LibDems MP and Treasury Policy Committee member Stephen Williams wants these stakes returned to the public in a no-cash giveaway. His plan, drawn up with corporate finance firm Portman Capital, could see each person in the UK receive about 1,450 shares in RBS and 440 in Lloyds. "There is danger that when the banks return to the private sector, it is business as usual. There is a general feeling in this country that we need to get something positive in return for the bailout," Williams said."HM Treasury needs to recover the approximately £66bn it spent bailing out the two banks. There is a general feeling in the country that we need to get something positive in return for the bail out. Williams' plan involves setting a floor price - likely to be the price where the government would break even - below which the shares cannot be sold. Above that point, share recipients could sell the shares and keep any profit while the government would get its money back. "The Floor Price removes the risk of a General Motors' style loss (where the US Government expects to lose at least $10bn), and of a Gordon Brown gold sale - as the profit will go to the British people, not the City's bankers or overseas investors," Williams added.If the RBS share price rose to 75p and Lloyds to £1.10, taxpayers would make a profit of £520 each, he claims.