George Osborne sells £2.1bn of RBS shares at a loss.

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The government have now decided to sell £2.1bn of Royal Bank of Scotland shares, which is majority public owned. They are selling them at a loss, lower than the price at close of trading on Monday, and with no consideration for the interest paid by the treasury to borrow the money to buy the shares in the first place.

www.bbc.co.uk/news/business-33769906

I am baffled by this decision. I can see their point of view on the need to get the ownership of the bank back into private hands - however, with investors recommended to buy or hold their position, this decision seems ill-timed.

I wonder who be buying the shares.

The loss is just over £1bn, not £13bn. The government still owns a 71% stake.

And RBS is not consistently profit making AFAIK.

Gordon Brown sold the gold to prevent another financial catastrophe, and I think he did exactly the right thing.

As the government is a majority shareholder, it may be bound by the Stock Exchange rules to make such announcements. Indeed, such announcements prevent insider trading which has been mentioned upthread as there can be no insider trading on something the market knows.

Do you really think that it was done on instruction from the Chancellor of the Exchequer in order to lose money? For what earthly purpose? If he wanted to do a mate a favour there are way subtler ways of doing it than this. And tens if not hundreds of people will have been involved in this sale process.

You might disagree with Osborne's politics but this is a piece of practical economics happening in plain sight.

"Gordon Brown sold the gold to prevent another financial catastrophe, and I think he did exactly the right thing."

Fair enough.

And perhaps the government overpaid for the RBS shares at a time of crisis (since the bank would've failed otherwise, you could argue the shares had nil value) so a loss was inevitable.

Discussing whether a decision was right or wrong is a sensible discussion. Predicating that discussion on the basis that the most senior financial figure in the country (be that labour or Tory) is making his decisions to do a mate a favour is nonsensical.

So you know what 'the world' is thinking and can speak for it can you

That's a bit rich since I was responding to your claim to know what 'the world' is thinking. I at least base my views on people's opinions on evidence rather than assuming that everyone agrees with me. Google reveals that the internet is not awash with people branding this crony capitalism. Indeed, excluding this thread, there appear to be only two references to crony capitalism in relation to RBS on the internet currently and one of those uses the term to refer to Jeremy Corbyn's plans should the bank remain in public ownership.

The public should own this bank outright and all profits should go towards rebuilding this country and its economy

The record of governments running high street banks is extremely poor. The chances of there being any significant profits are low because of the governance issues it brings into play which make it difficult for the bank to operate.

The Royal Bank of Scotland Labour bought back in 2008 was in asset terms, one of, if not THE, largest bank in the world where the Investment Banking arm was still capable of making £billions each quarter, to offset most of the £billions of company/consumer mortgages and loans being written off over those same quarters.

But since then RBS;

• Is now about half the asset size it was.

• Has around half the staff it had.

• Is government owned and governments have a pee poor record of running businesses.

• Has become more of a domestic high street bank, than fee generating Investment Bank.

• Has yet to pay stock holders a dividend since the crash and may not for a year or two to come.

So RBS’s current situation neither appeals to price ‘growth’ and/or ‘dividend’ stock market investors e.g. Pension Funds, who will see limited upside potential of holding this stock.

So those overhanging negatives will be why nearly every international bank peer whose stock prices ‘bombed out’ during the worst of the financial crash, have recovered far better in price terms than RBS - as stock pickers don’t need a government held back Scottish lemon in their stock portfolios, when have a global fruit basket of bank stocks to chose from.

Moreover, the stock market rally began around mid 2009, so is quite mature, and who knows how much further stock market prices will go, beyond say 2017, as global interest rates start rising?

The fact that the UK had 78% of RBS which is huge, the government can only sell it pre placed, rather than trying to smack the dealer bids which will flake very quickly – and the markets know our £5 approx RBS ‘in’ price – should any investors want a limited growth, non dividend paying bank lemon, the price for the 78% of stock overhang was NEVER going to go far above our cost price, if at all.

Therefore what is important is the AVERAGE price we get for the whole 78%, and as the UK divests stock, getting closer to private ownership and paying dividends, RBS’s price will gradually Price/Earnings re-rate itself (higher) to its banking peers.

In summary, like all lemons, buyers need to suck it and see, and establishing price/demand info is an important step within an ‘average price’ end game. IMO.

The FTSE is down close to 7% over the past month.

Global growth now looks dodgy, even in China, with 'now GOT our money' political uncertainty over Greece, just for a change.

No one knows where 'shocks and scares' prices will be in a month, never mind 1-3 years ahead, so waiting for a profit to do something, anything, has never worked over the long term with an investment with a funding cost.

It really is getting the 'average price' of the sales from 78% of the company as close to, or above our cost, that really matters.