Labour seeks a value-for-money test for disposals of holdings in Lloyds Bank and RBS, which has seen share price fall
Labour is demanding the government spells out how it intends to ensure taxpayers get the best deal from any sale of stakes in Britain's bailed-out banks, amid expectations that the first chunk of Lloyds Banking Group shares could be sold shortlyl.
The party has tabled amendments to the banking reform bill, which is due to be debated in parliament on Monday. If passed, they would force the Treasury to say how the best interests of the taxpayer would be protected before any sale went ahead.
Sovereign wealth funds such as the Singaporean government's Tamasek fund are said to be interested in tabling an offer for a stake in 39%-taxpayer-owned Lloyds and a consortium led by former trade minister and one-time Standard Chartered boss Lord Davies is also said to be trying to mount an offer. The first opportunity for a sale is next month when Lloyds publishes its half year results on 1 August – but it will depend on the share price.
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| Ed Balls said: "The value of the taxpayer’s stake in Royal Bank of Scotland has dropped by more than £4bn in recent weeksGeorge Osborne admitted last month that work was under way on selling off Lloyds, with a stake to City investors the most likely option. But the chancellor admitted that 81%-taxpayer-owned Royal Bank of Scotland could take longer to sell as he commissioned a report into breaking it up into a good and bad bank. |
UK Financial Investments, which looks after the stakes in the bailed-out banks, is making preparations for a sale of both banks by asking investment banks to submit tenders to advise on the selloffs. Those pitches must be received on Monday, and all of the City's top banks are expected to make submissions.
Labour intends to challenge the government to ensure taxpayers' interests are protected. While the amendments are unlikely to be implemented before any selloff, particularly of Lloyds, Labour will hope to put pressure on the government to explain the rationale for any sale.
Ed Balls, the shadow chancellor, said a report needed to be conducted before any selloff because of the situation at RBS where the share price has fallen sharply since its chief executive, Stephen Hester, was ousted in mid-June to pave the way for privatisation.
Labour wants the report to calculate the value-for-money of any selloff, after taxpayers pumped tens of billions of pounds into both banks, along with the impact on competition and the wider economy.
Balls said: "This [report] is needed more than ever following George Osborne's disastrous handling of RBS in recent weeks. The value of the taxpayer's stake in RBS has now fallen by over £4bn since Stephen Hester was ousted with no replacement lined up."
"And while the chancellor has been forced to back down from his foolhardy idea of a pre-election loss-making firesale of RBS, we know with George Osborne that the political games always come before the economics and the taxpayer's interest," Balls added.
Labour also intends to table amendments to the bill to adopt recommendations by the parliamentary commission on banking standards, chaired by the Conservative MP Andrew Tyrie. These include deferring bonuses up to 10 years and criminal penalties for reckless misconduct.
Labour also wants a "backstop power" for full separation of all the banks if the ring fence between high street banks and investment banks, recommended by Sir John Vickers, proves ineffective. Speculation about a sale of Lloyds began in March when the boss, António Horta Osório, was linked to selling off part of the taxpayer's stake at prices above 61p
Article Source : http://www.guardian.co.uk
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