UK likely to hold off on selling more RBS shares

The British government will probably wait to sell more Royal Bank of Scotland shares until next year after the country's banks reported weaker third-quarter earnings than analysts estimated, according to sources

RBS said on Friday that third-quarter pretax profit slumped by more than half, missing analysts’ estimates and undermining the UK treasury’s plans to cut its 72.8 per cent stake further, a source said.

With banks ranging from ABN Amro, Credit Suisse Group and Standard Chartered tapping investors for cash and earnings across European lenders battered by rising costs, a sale was put on hold until 2016, the source said.

UK chancellor George Osborne is seeking to sell more RBS shares after raising £2.1 billion in August, the first disposal since the bailout.

While he has since gained room to continue selling shares after a 90-day lockup lifted this week, four out of Britain’s five largest lenders reported third-quarter earnings that missed analyst estimates.

At RBS, pretax profit before one-time items and restructuring costs fell to £842 million in that period from £2.05 billion a year earlier. Trading Volume Lockup agreements are put in place to keep a company’s share price stable after an equity offering, preventing employees and controlling shareholders from selling the stock.

Monday was the first day of trading since the government’s lockup expired. Since disposing a 5.4 per cent stake at 330 pence apiece to money managers in August, the volume of RBS shares traded on European exchanges hasn’t increased as much as expected, according to the source.

- Bloomberg