LONDON (Reuters) - Britain’s Labour party would halt the privatization of Royal Bank of Scotland (RBS) if it came to power but would not seek to exert day-to-day control, the opposition party’s shadow banking minister told Reuters.
RBS remains 62 percent owned by British taxpayers after a 45 billion pound ($58.3 billion) bailout in the 2008 financial crisis, although the Conservative government has conducted two share sales as it looks to return it to private ownership.
Labour’s plans for the bank are among scores of policies in sharper focus as turmoil over Brexit raises the chances of a change in government, although the latest poll from research consultancy Opinium shows the left-wing party has dropped seven points behind the Conservatives.
Having previously suggested full nationalization of RBS, Labour has been rowing back as it seeks to build bridges to the City of London and ease concerns about a Labour-led Britain.
The government’s two RBS equity sales so far have crystallized deep losses for British taxpayers on shares that have almost halved in value since the bank’s rescue.
“If RBS is now paying dividends, and the price of the shares is under what was paid, we cannot see the rationale for selling more shares,” said Labour’s Jonathan Reynolds.
RBS shareholders voted on Wednesday to approve the bank’s plans to begin buying back its shares from the government in order to accelerate a return to majority private ownership, with more than 98 percent backing the proposal.
When asked at the general meeting if RBS was rushing the resolution through due to concerns about Labour winning power, chairman Howard Davies denied this was the case, adding: “They will have to speak for themselves.”
He added that the resolution paved the way for RBS to take part in a sale by the Treasury during an open period running between now and its annual general meeting in April.
(Graphic: RBS share price - tmsnrt.rs/2TsG75m)
The Labour party, meanwhile, has cooled on plans to nationalize or break up RBS, Reynolds said.
He said those options have not been ruled out totally, but the extent of state involvement would depend on RBS’ willingness to increase lending to Britain’s regions and small businesses.
“We don’t have a policy of day-to-day control of RBS,” he said. “But there is clearly unmet demand in lending and a problem with financial inclusion.”
The softening of Labour’s position is intended to reassure bankers concerned about the intentions of the party’s left-leaning leadership.
Labour is also considering ditching its so-called “Robin Hood Tax” on financial transactions, first suggested in May 2017 as a means of raising 26 billion pounds to invest in public services.
“The financial transactions tax was a revenue-raising proposition at that time ... we are talking to the City about alternative ways of raising that,” Reynolds said.
Labour’s leadership has previously made no secret of its antipathy towards Britain’s banks, but the party has been stepping up its engagement with bankers to allay concerns.
Last week it opened a monthly “City surgery” in the heart of London’s financial district, where professionals can meet the political party’s team to help provide a better understanding of its policies, Reynolds told Reuters.
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Reporting by Iain Withers and Lawrence White; Editing by Sinead Cruise, David Goodman and Alexander Smith
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