Royal Bank of Scotland shares rise on privatisation plan

11th Jun 2015 14:46

Royal Bank of Scotland rose 2% on Thursday on news that the UK government will begin the process of returning shares to private ownership in the coming months.In his Mansion House speech late on Wednesday, Chancellor George Osborne said the government would start selling its £32bn stake in RBS, even at a loss, in a move that marks a turning point in the bank's recovery.Investec said that the timing of the announcement "was arguably somewhat premature, dictated more by politics rather than, necessarily, an exercise in optimising market timing.""That said, we continue to believe that the RBS share price will see support on a 12 month view from the emergence of a material capital surplus and a return to profit in 2016," it added.RBC Capital said the disposal is likely to take years. "Overall, we believe the news is positive for the shares since it should allow RBS to exit the dividend access share sooner and all else equal allow it to return excess capital it generates from its planned restructuring to shareholders sooner."Meanwhile, IG analyst David Madden said: "The taxpayers' loss is the investors' gain, and the perception of the bank will change when Westminster starts to wind down its stake in the finance house."He said that RBS' share price has effectively been capped as the government holding restricts its capability, and a smaller government influence will attract a different breed of banker to the institution.