A branch of RBS bank in Nottingham, Britain, December 1 2017. Picture: REUTERS
A branch of RBS bank in Nottingham, Britain, December 1 2017. Picture: REUTERS

London — Britain has sold some of its holding in Royal Bank of Scotland (RBS), the bank it rescued in the 2008 financial crisis, but has taken a loss of more than £2bn on the deal.

UK Government Investments sold a 7.7% stake in a placement overnight to institutional investors at 271p a share, which was almost half of what the government paid during its initial and largest capital injection into RBS, which it bailed out for £45.5bn.

"This sale represents a significant step in returning RBS to full private ownership and putting the financial crisis behind us," Chancellor of the Exchequer Philip Hammond said.

Once one of the largest banks in the world by assets, RBS’s near collapse required Britain’s biggest bailout, leaving the government still holding a large stake nearly a decade later.

After the latest sale its holding is 62.4%. Britain’s opposition Labour party criticised the share sale when it was announced late on Monday, saying that taxpayers would lose out and the government should have held out for more. The bank’s shares fell 3.4% on Tuesday.

Jefferies analyst Joseph Dickerson said the sale marked a step towards longer-term investment value in RBS, which has not paid a dividend for a decade.

RBS CE Ross McEwan said the government’s decision reflected the progress RBS had made in becoming simpler and safer. "This is an important moment for RBS," said McEwan, who has presided over the bank’s turnaround since 2013 and a series of key milestones in recent months.