Shares in Royal Bank of Scotland have risen after Britain's Finance Minister George Osborne said the government would start selling its 32 billion pound stake in the bank. As Ciara Lee reports the sale plan represents a milestone in terms of RBS's recovery from the financial crisis but also means Osborne has given up on his original intention to sell the shares for a profit.
It was a symbol of Britain's financial crisis - the government bailing out the Royal Bank of Scotland. Nearly seven years on, Britain is to start selling its 32 billion-pound stake in the bank. Finance Minister George Osborne. (SOUNDBITE) (English) BRITISH FINANCE MINISTER, GEORGE OSBORNE, SAYING: "From bailing out the banks to bringing them back from the brink, now it's time for RBS to rebuild itself as a commercial bank no longer reliant on the state but serving the working people of Britain." RBS - once one of the world's biggest lenders - is now Britain's fourth-largest bank by market value It was saved from collapse by the former Labour government. It cost 45.8 billion pounds to taxpayers, leaving the government holding an 80 percent stake. The announcement represents a milestone for Osborne, who is trying to put the crisis behind him. Azad Zangana is from Schroders. (SOUNDBITE) AZAD ZANGANA, EUROPEAN ECONOMIST, SCHRODERS, SAYING: "They have obviously sold some of these assets off in the past, and they will inevitably sell off the remaining at some point. Especially when those two conditions are no longer required. I.e. the financial system is working well and these banks no longer pose a risk. And of course as soon as we are satisfied that those customers of those banks are reasonably well protected." Osborne received independent advice from the Bank of England and investment bank Rothschild on the sale. It will lead to taxpayers losing more than 7 billion pounds on the rescue. But Rothschild predicts they will make a profit from the full bailout plan which includes other banks. Reuters Breakingviews' Dominic Elliott, says the privatisation is long overdue. (SOUNDBITE) (English) REUTERS BREAKINGVIEWS COLUMNIST DOMINIC ELLIOTT, SAYING: "It's a good thing if we can try and get RBS back into private hands not least because the government has been meddling in the way it is run which hasn't helped to improve performance." RBS shares are still below the government's average buy-in price. And it could take years to sell off the entire stake. But investors don't seem to mind - shares rose two percent in morning trade. And that increased liquidity could make the bank a more attractive investment opportunity.