Taxpayers to wash face on RBS and Lloyds

15th Dec 2010 12:03

The National Audit Office says that the UK government is unlikely to make a loss on bailing out the UK banks but it is paying £5bn a year in interest on cash used in the bail out. The final outcome depends on the cash raised from the eventual sales of the stakes in Royal Bank of Scotland and Lloyds. The government owns 83% of RBS and 41% of Lloyds. The NAO estimates that a sale at the beginning of the month would have incurred a £12.5bn loss. It argues that the share disposals will need to be handled in stages because of their potential size. A potential break up of Lloyds and RBS could have an effect on how much the government can realise from its shares in the banks, so this is purely a theoretical exercise by the NAO. The government support for the banks is being reduced and the interest costs are currently being offset by fees paid by the banks.