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RBS could be taxpayer-owned for further decade

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State-owned lender Royal Bank of Scotland (RBS)has predicted it could take ten years to fully return to the private sector, according to reports.

The bank intends to be ready to start paying dividends in late 2014, which would be seen as a signal it will be ready to re-enter the private sector, the Times reports.

After further repairs to the bank’s balance sheet over the next 18 months, senior RBS figures believe it will be returned to the private sector in four offerings over ten years. That would equate to four rounds of shares worth over £10bn, the paper reports. 

In 2008, Gordon Brown’s government bought a controlling stake in RBS for £45.5bn at 50p a share, or 500p a share post consolidation.

The market value of RBS shares was 41p at the time, but the government paid an extra £12bn to help protect RBS.

Liberal Democrat leader Nick Clegg has previously suggested every adult in Britain could be given RBS and Lloyds shares worth hundreds of pounds under plans to create a “people’s banking system”.

RBS is set to announce it has settled with British and US regulators over LIBOR-fixing, and this week it will also hold further discussions with the FSA about the levels of capital it should hold.

The Treasury has blocked further injections of taxpayer cash, meaning further capital can only be raised by shrinking and selling existing divisions, the Times reports.

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