Will UK taxpayers lose out if UK banks are split?
Despite the fact that the UK government believes that splitting UK banks will help introduce more competition into the sector there is a feeling that taxpayers could lose out on their direct investments in the likes of Lloyds bank, Royal Bank of Scotland and Northern Rock. It is believed that Royal Bank of Scotland alone could possibly lose around £2 billion a year in profits simply by spinning off the insurance division and the branch network.
It is very difficult for the UK government to find a balance between injecting competition into the UK sector and at the same time protecting taxpayer investments and potential returns for the future. While we still await the official small print regarding the potential sale of bank branches up and down the country, there is growing concern that reduced profitability in the short term for the likes of Lloyds bank and Royal Bank of Scotland will directly impact upon the value of taxpayer held shares in these companies.
It is interesting that only a few weeks ago the UK government was talking about potentially selling off the stakes in the short term only to do a U-turn after the EU commission became more heavily involved and decided to issue heavy sanctions.
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