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UK ‘may never recover’ £66bn spent saving RBS and Lloyds

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The UK economy may never recover the £66bn spent on rescuing Royal Bank of Scotland (RBS) and Lloyds, a new report has warned.

A report released today from the influential House of Commons’ Committee of Public Accounts’ says real risks remain around the sale of stakes in both state-backed lenders.

It said any sale is not likely “any time soon” as “huge challenges remain” before that can be achieved.

“The £66 billion cash spent purchasing shares in RBS and Lloyds may never be recovered,” it added.

RBS was rescued at the height of the credit crisis four years ago, while Lloyds was forced into a deal to rescue HBOS which in turn led to it being bailed out.

At the time one lender – Northern Rock – had already gone bust after short-term funding markets dried up, leaving it with no access to funding.

The MPs go into detail about the problems faced when trying to subsequently offload part of Northern Rock years later, in particular noting the lack of buyers for such banks.

They said such subdued levels of demand could impact any future sale of RBS and Lloyds, lowering any sale price.

“Once UKFI decided to sell the bank, the sale was handled well, but the low level of competition does not give us confidence that the taxpayer will make a profit on the sale of RBS or Lloyds,” they said.

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