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UK government ups stake in Royal Bank of Scotland to 70%

The recent £5 billion share offer from Royal Bank of Scotland (RBS) appears to have been a disaster with just 0.7% of the shares on offer placed with institutions. This has left the UK government to take up the balance and increase the taxpayer's stake in the business to 70.3%. However, those who believe the situation at RBS will now calm down may be in for a significant shock.

There are strong rumours that the company is about to announce job cuts to the tune of 9000 with over half expected in the UK. Unions are currently up in arms at the prospect of significant job losses as the move from the private ownership to the public sector appears set to be backfiring. To all intents and purposes Royal Bank of Scotland is owned by UK taxpayers although the business will still retain a share listing with 30% in institutional and individual investor hands.

Slowly but surely the UK government is increasing its control over the UK banking sector and, thankfully, over the last few days there have been signs of increased liquidity in money markets. If Gordon Brown and the Treasury are unable to continue this trend perhaps Gordon Brown will then be able to claim some credit for his significant gambles on the UK economy.

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