UK Government Investments, the entity responsible for managing the British government's stakes in corporations, has begun contacting investment banks to gauge interest in a potential sale of shares in Royal Bank of Scotland Group PLC, The Times of London reported.
The move followed a $4.9 billion settlement in principle between RBS and the U.S. Justice Department over a long-running investigation into allegations that the bank missold U.S. residential mortgage-backed securities in the run-up to the 2008 global financial crisis. The British government, which holds an approximately 71% stake in RBS, intends to commence the bank's privatization by March 2019 but previously signaled that no share sale would take place until after RBS settles the DOJ probe.
The government first sold a 5.4% stake in RBS in 2015 in a transaction arranged by Citigroup, Goldman Sachs, Morgan Stanley and UBS. These companies, as well as JP Morgan, are well placed to work on a potential new sale.
Britain risks selling its stake in RBS at a loss, as shares in the bank are currently below the 502 pence per share that the government paid to bail out the lender in the financial crisis.
UK Financial Investments Ltd. had previously managed the government's stake in RBS before all of its activities were transferred to parent UKGI on March 31.