This step would witness U.S. lender kickstart one of the largest privatizations in the U.K. history.
Bank of America Corp. (NYSE:BAC) is close to being nominated as the corporate broker, in a move that will see the US lender kick start the process of undertaking one of the largest privatizations in the history of the UK.
UK Chancellor, George Osborne, has announced the UK government will dispose of less than 80% of its stake in the RBS, which is currently worth at 32 billion British Pounds, less than $46 billion in which the government injected the taxpayers’ money to keep it afloat in the height of the financial crisis.
The Charlotte, N.C, based banking group was also involved as a corporate banker to Lloyds Banking Group Plc., another one of the banks that had to be bailed out, and is also in the process of being privatized. On top of that, the bank was also declared as the joint broker along with Royal Mail early this year, in which the UK government sold a 15% stake worth more than 750 million pounds through accelerated book building earlier this week.
Key to all is the head of Bank of America’s global financial institutions business, Jim O’Neil, who had a stint at the RBS, while concurrently also working with the U.K. Financial Investments, a body responsible for managing the UK government’s stake in the financial institutions, particularly in RBS.
According to Osborne, the UK government will initially face a loss from sale, since the stock, which was trading at 3.65 pounds, is well below the average share price of 5 pounds, when the company was first bailed out. Thus, the initial sale would involve a free float, which could pave the way for a larger sum of shares to be sold later.
The Chancellor did warn though that the process of privatization could take years, a tacit indication that a retail offering to the general public, on top of institutional investors, is incorporated as a part of the plan. Even before this phase begins, which is not known, the bank has a host of issues to resolve, like getting its act cleaned up to a range of regulatory issues to be resolved. Banking analysts expect that most of these issues would be resolved by the end of the year before the privatization can proceed.
Currently, RBS has Morgan Stanley and UBS for the role of brokers, but it is unlikely that the latter will ‘re-tender’ for the role due to its conflict of interest, which explains why RBS has been on a search for another corporate broker.
Bank of America Corp stock price ended the day flat at $17.49.
Bank of America Corp. (NYSE:BAC) is close to being nominated as the corporate broker, in a move that will see the US lender kick start the process of undertaking one of the largest privatizations in the history of the UK.
UK Chancellor, George Osborne, has announced the UK government will dispose of less than 80% of its stake in the RBS, which is currently worth at 32 billion British Pounds, less than $46 billion in which the government injected the taxpayers’ money to keep it afloat in the height of the financial crisis.
The Charlotte, N.C, based banking group was also involved as a corporate banker to Lloyds Banking Group Plc., another one of the banks that had to be bailed out, and is also in the process of being privatized. On top of that, the bank was also declared as the joint broker along with Royal Mail early this year, in which the UK government sold a 15% stake worth more than 750 million pounds through accelerated book building earlier this week.
Key to all is the head of Bank of America’s global financial institutions business, Jim O’Neil, who had a stint at the RBS, while concurrently also working with the U.K. Financial Investments, a body responsible for managing the UK government’s stake in the financial institutions, particularly in RBS.
According to Osborne, the UK government will initially face a loss from sale, since the stock, which was trading at 3.65 pounds, is well below the average share price of 5 pounds, when the company was first bailed out. Thus, the initial sale would involve a free float, which could pave the way for a larger sum of shares to be sold later.
The Chancellor did warn though that the process of privatization could take years, a tacit indication that a retail offering to the general public, on top of institutional investors, is incorporated as a part of the plan. Even before this phase begins, which is not known, the bank has a host of issues to resolve, like getting its act cleaned up to a range of regulatory issues to be resolved. Banking analysts expect that most of these issues would be resolved by the end of the year before the privatization can proceed.
Currently, RBS has Morgan Stanley and UBS for the role of brokers, but it is unlikely that the latter will ‘re-tender’ for the role due to its conflict of interest, which explains why RBS has been on a search for another corporate broker.
Bank of America Corp stock price ended the day flat at $17.49.