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George Osborne under fire following RBS shares sale

The government has sold part of HM Treasury’s shareholding in The Royal Bank of Scotland Group plc, costing taxpayers £1bn.

Chancellor George Osborne is facing widespread criticism for selling 5.4% of shares in the part nationalised lender, originally bought for 500 pence apiece.

The sale begins the privatisation of the bank after the treasury originally purchased the shares as part of the bailouts in 2008 and 2009.

With the government disposing of 630 million shares, or a 5.4% stake in the bank, at 330 pence apiece, a significant loss has been made.

The 170 pence difference reportedly represents a loss of £1.07bn on the shares sold. The overall size of HM Treasury’s economic interest in RBS will now be reduced from approximately 78.3% to approximately 72.9%.

RBS, meanwhile, is struggling to make a sustainable profit. Whilst profits were adjudged to be £293m for the second quarter of 2015, the bank still made a loss of £153m across the first half of the year.

The government now hopes that private investment from powerhouses such as Citi, Goldman Sachs, Morgan Stanley and UBS will prevent the bank’s potential collapse. Whilst many in government support the chancellor’s decision, Labour have criticised the expedience of the sale.

Labour counterpart, the Shadow Chancellor Chris Leslie, described the selloff as a “fire sale.” “RBS had to be bailed out urgently, but it doesn’t have to be sold off at the same speed.”

Moreover, Ian Gordon, a banking analyst at Investec, told the BBC’s Today programme: “The taxpayer is being short-changed.”

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