When will the UK government sell its banking stakes?

Only a few months ago there was constant chatter in the markets that the UK government was on the verge of disposing of sizeable stakes in Royal Bank of Scotland and Lloyds bank. However, over the last few weeks this chatter has subsided amid concerns regarding the short to medium term prospects for the UK banking industry and the economy as a whole. So when will the UK government dispose of stakes in Royal Bank of Scotland and Lloyds bank?

It would seem, officially, that plans to dispose of banking stakes in the short to medium term have been put on the backburner. The government needs to be very careful and aware of public concern regarding these banking stakes and the requirement that taxpayers are seen to be allowed to exit with a profit. However, holding the stakes for ever and a day does put the UK government in a very difficult situation, even though the shares are held at arm's length in a separate entity, because of potential conflicts of interest.

As a consequence, we are unlikely to see the UK government dispose of the shares as the economy struggles but once buoyancy returns to the UK economy and the financial sector in particular then we can begin to look to the future and potential share stake sales, whatever form these sales may take.