At last the government has restarted the process of selling its stake in Royal Bank of Scotland. A first £2 billion sale in 2015 (of 5 per cent of the bank’s shares) took place at 330 pence per share, against a purchase price of 502 pence in the 2008 bailout. Those numbers looked so embarrassing for George Osborne that the sell-off file was consigned sine die to a Treasury basement; but now that RBS has returned to a slim profit after nine years of losses, Philip Hammond sold another £2.5 billion tranche on Monday, ahead of what his advisers evidently think will be a weaker stock market after the European summit, but at an even worse price of 271 pence.
That’s a notional loss of £3 billion on the two sales so far, with 62 per cent of the bank still in public ownership. The plan, we’re told, is to sell annual tranches over the next five years until the holding is reduced to zero. But the overhang of shares waiting to be sold, combined with continuing negative sentiment towards all UK bank shares, plus goodness knows what turbulence in the economies and markets where RBS operates between now and 2023, mean the selling price is highly unlikely ever to reach the margin above £5 that would create an overall break-even for the taxpayer — as was achieved in the sell-off of the smaller and less troublesome Lloyds stake.
A fair guess might be a final loss of a third of the £45 billion injection that was required to keep RBS alive. That was a price worth paying, arguably, if it held off the chaos of a meltdown of the banking system: just think of the number of ways governments can waste £15 billion with no positive impact at all. Let’s hope what emerges by 2023 is not merely today’s RBS unchained, but something more progressive, customer–friendly and worth owning shares in. Better still, once it’s back in the private sector, there will be an opportunity to advance a demerger of NatWest in England, Coutts in wealth management and RBS in Scotland. That, I suspect, really would be a positive result for customer and shareholder alike.
We fret about the health of UK banks, but the Germans have it worse. Their banking system was once the envy of the world: unlike ours in modern times, it was the cautious, public-spirited locomotive of a formidable industrial economy. But now look at Deutsche Bank: about to cut 7,000 jobs after three years of losses, its shares at an all-time low, its US arm categorised as ‘troubled’ by the Federal Reserve, its credit rating slashed by Standard & Poor’s. Chief executive Christian Sewing, appointed in April to replace sacked John Cryan, told staff this week he’s ‘sick and tired of bad news’, but it looks set to keep coming, amid whispers of a possible forced merger with second-ranking Commerzbank, which itself had to be bailed out after 2008. How are the mighty fallen.
In The Billionaire from Nowhere, their 2004 biography of Roman Abramovich, Dominic Midgley and Chris Hutchins offer a cameo of Chelsea fans, grateful for the £100 million their club’s Russian owner had just spent on new players, singing to the Only Fools and Horses tune: ‘…If you want the best/ Then don’t ask questions/ ’Cos Roman, he’s our man/ Where it all comes from is a mystery/ Is it guns? Is it drugs?/ Is it oil from the sea?’ To which Abramovich’s spokesman provided a footnote: ‘Obviously there’s an education process, not just for Chelsea fans but for all of the UK. They’re learning… about a man who has done well in a difficult environment and come out on top.’
That last statement was certainly true of a small-time trader who won a multi–billion fortune from the privatisation of Russia’s energy sector. How galling it must be, after all these years on top, to have the renewal of his UK ‘Tier 1 investor visa’ held back for unspecified reasons: so galling that he has responded by taking Israeli citizenship and pulling the plug on a £1 billion rebuilding of Chelsea’s Stamford Bridge stadium.
A tightening of rules since 2015 has made Tier 1 visas much harder to obtain, causing the number issued to plunge. But between 2008 and 2015 they were handed out with few ‘source of wealth’ questions asked, so long as the minimum holding of approved UK investments (now £2 million) was met. An estimated 700 Russians and similar numbers of Chinese came in on that basis, bringing billions with them that pumped up real-estate prices but left no other obvious economic footprint. As property markets cool, we might not welcome a sudden exodus. But if Abramovich’s visa hitch turns out to be the first of many — rather than a one-off exercise in Putin-baiting — it will at least be a belated redress to London’s reputation as an easy haven for unexplained wealth.
There are still only 13 female chief executives in the entire FTSE350, the same number as ten years ago; and there are more blokes called Dave than women of all names in the roll-call of FTSE100 bosses. Meanwhile, the whole topic of gender inequality at boardroom level is a conversational minefield, as I discovered the other day when I foolishly referred to ‘a natural order of things’ in which more women than men are likely to make positive choices in favour of family life rather than corporate stress.
I was talking to a female City veteran and serial non-executive director, who dealt with me as she might a disruptive floor-speaker at a turbulent AGM. Your ‘natural order’, she declared fiercely, is nought but patriarchal prejudice. Without it, there might still be a difference, not in the relative numbers of senior men and women which would move gradually towards equality, but only in their relative age. Women who take mother-hood breaks, she said, tend to take a few extra years to reach the highest echelon — but arrive with all the more accumulated wisdom, making a matriarchal corporate world an altogether safer and more fruitful place. I’ll keep quiet on this one in future.