The Times

RBS shares are worth about £1.50 less than the 502p the government paid seven years ago under a bailout for the beleaguered bank

The sale of Royal Bank of Scotland shares is expected to begin within days, spelling losses for the taxpayer of hundreds of millions of pounds.

Bankers acting for the government began calling potential investors this week in preparation for a multibillion-pound sell-off that could come as early as Tuesday, The Times has learnt.

George Osborne has pledged to sell three quarters of the UK’s 79 per cent holding in RBS within this parliament. The timing of the planned sale of the first tranche will raise eyebrows, however. RBS shares were down more than 2 per cent yesterday after the bank announced a £153 million loss for the first half of the year.

At their current market price, the shares are worth about £1.50 less than the 502p that the government paid seven years ago under a £46 billion bailout as the bank stood on the brink of collapse. Based on the closing price of 344.8p, if the entire RBS stake were to be sold today the loss to the taxpayer would exceed £10 billion.

Sources said that the hope was to sell shares equivalent to a 6 per cent stake in the bank, worth about £2.5 billion. Once the decision is made to go ahead, the process could be completed in hours.

Ross McEwan, chief executive of RBS, has said that the shares could eventually be sold at a profit, but early sales would have to be at a loss, mirroring the approach taken over the past two years as the state’s holding in Lloyds Banking Group has been cut.

In the case of Lloyds, the shares were closer to the taxpayer’s break-even price. RBS today remains far adrift of the level needed for a profit, leaving the chancellor open to accusations that he is selling off the stake too cheaply.

The government will also be conscious of the heavy criticism it received over the botched privatisation of Royal Mail, with a report last year concluding its £2 billion stockmarket flotation undervalued the business by about £180 million.

Goldman Sachs has been appointed to advise the government on completing the privatisation of the public’s stakes in RBS and Lloyds.