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Government left with £2.3 billion loss after shareholders snub RBS rescue

The government has today been left nursing a £2.3 billion loss after Royal Bank of Scotland shareholders snubbed their attempt at raising £15 billion and leaving the government to take up the vast majority of shares on offer. The government's holding is now 57.9% and gives its effective control of one of the U.K.'s largest commercial banks.

This is not the start to the rescue package which the UK government had hoped for, after suggesting that buying shares at "rock bottom prices" would give the taxpayer the potential for substantial growth in due course. Of course this may happen in due course, but at the moment on day one of acquiring shares the government is already nursing a £2.3 billion loss. This does not bode well for the next round of rescue bailouts which will involve Lloyds TSB and HBOS to name but two.

As we have suggested on a number of occasions there is now the possibility of a conflict of interest between the government and their stake in Royal Bank of Scotland. This has the potential to be a real thorn in the government's side and could be a major issue over the coming weeks, months and years ahead.

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