Lib Dem urges bank share giveaway

2011-03-07 15:25:34

7 March 2011 Last updated at 14:22 Share this page Delicious Digg Facebook reddit StumbleUpon Twitter Email Print Lib Dem urges RBS and Lloyds shares giveaway By Andrew Bryson Business reporter, BBC News UK taxpayers own an 83% stake in RBS Continue reading the main story Big Banking Barclays to sell Blackrock stake Greek losses hit Credit Agricole Bankers win unpaid bonus battle RBS confirms state loan repayment

Senior Liberal Democrats want the government to give away billions of pounds of its shares in Royal Bank of Scotland and Lloyds Banking Group to the general public.

The radical idea would see most of its stake in the banks shared between 46 million adults on the electoral roll.

A floor would be set so the shares could not be sold until they had passed the price paid by the government.

Individuals would only keep any gains made above that floor price.

The government spent £65.8bn buying shares in the banking giants.

It owns 83% of RBS and 41% of Lloyds.

The idea is set out by Stephen Williams, Liberal Democrat MP for Bristol West, in a pamphlet for the think tank Centre Forum.

He said: "There is a danger that when the banks return to the private sector, it is business as usual. There is a general feeling in this country that we need to get something positive in return for the bail-out.

"This plan would recoup the public's investment and allow the taxpayer to get the benefit from any increased value in the banks."

Under the proposal, shares would be deposited in individual trading accounts.

Mr Williams told the BBC how he saw the plan working: "Every citizen would have the same rights as shareholders at the moment, so they'd have the rights to get the company annual report. They could turn up at the AGM.

"What might happen, for instance, is there could be shareholder associations set up of citizens who own these shares, who will put pressure on the banks to change their behaviour. Banks and all other companies are meant to be owned by their shareholders and to respond to their shareholders' wishes."

Popular appeal

At current prices, every adult would receive shares worth just under £1,000.

Continue reading the main story “Start Quote

If everyone could profit in a tangible, personal sense from the recovery of the banks, perhaps there would be less of a general feeling around the place that banks and bankers are only in it for themselves”

End Quote Robert Peston Business editor, BBC News Read Robert Peston's blog

Each account would be set up with a default option to sell the shares over two or three years, although individuals could opt to hold the shares for longer.

The idea may have popular appeal - but it was not conceived by politicians.

The city firm Portman Capital devised the model for the Liberal Democrats as a way round some of the problems the government could face in a traditional share sale.

Privatisations in the 1980s saw shares offered at a big discount.

That tempted institutional investors to buy in, but led to criticism the government was "selling the family silver" off too cheaply.

In 2008 and 2009 the government injected approximately £45.5bn into RBS by buying shares, and £20.3bn into Halifax Bank of Scotland, which was taken over by Lloyds.

Stagger

UK Financial Investments, which manages the public's stakes in the banks, is currently expected to sell them through conventional means.

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