Is the government right to look at selling off bank share stakes?
Today's announcement by the OFT (Office of Fair Trading), that the UK government should effectively disinvest various banking share stakes as soon as possible, has been backed by many investors and consumer groups. However, even though the UK government itself has been looking towards potentially selling off the sizeable banking stakes Gordon Brown is in a very difficult situation.
In what is fast becoming a no-win situation for the UK government, if the stakes are sold off with no profit or potentially large losses for taxpayers then the government would be criticised for wasting taxpayer's money. However, if the stakes are sold at a significant profit in the future the authorities will attract charges of undue influence over the marketplace and manipulating the situation for their own ends. In simple terms, the UK government is damned if it does and damned if it doesn't!
The only possible route for the UK government to save face and save taxpayers money is to ensure that the decision to sell or retain these stakes is passed over to the UKFI which was set up to look after the interests of UK taxpayers. It is also worth remembering that at this point in time the government would do very well to find a buyer for such large share stakes with the worldwide sector still under pressure.
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