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Is it time for the UK government to exit the banking sector?

Today's revelation that taxpayer share stakes in Royal Bank of Scotland and Lloyds bank currently boast a £3.4 billion profit has prompted the question from many in the UK investment arena as to whether the UK government should now consider exiting the banking sector?

If you cast your minds back just a few months the taxpayer stakes in Royal Bank Scotland and Lloyds bank were showing enormous losses and there was immense criticism of the original investments. However, despite the fact that the UK economy is nowhere near out of the woods as yet we have seen a significant rise in banking share prices which has had a massive impact upon the value of these taxpayer stakes. As the authorities continue to attack the UK banking sector with a threat of further taxes and regulations perhaps there is now a conflict of interest which needs to be addressed?

However, those who assume that the UK government will make public its intentions regarding the share stakes may well be disappointed because ultimately as soon as the government announces plans to dispose of the share stakes there will be a drop in the relevant share prices. The UK government would be well advised to keep its plans very close to its chest for the time being.

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