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RBS and Lloyds share drops push taxpayer loss to £11billion

14 July 2009 / by Rebecca Sargent

The sustained drop in the value of Royal Bank of Scotland and Lloyds shares has meant that the taxpayer loss now stands at just under £11billion.

Late last year and early this year, the Government finalised deals to invest heavily in both RBS and Lloyds Banking Group to avert disaster as both banks were brought to their knees by the financial crisis.

But since then the value of both RBS and Lloyds shares have dropped dramatically, leaving the UK taxpayer with a collective loss of nearly £11billion.

UK Financial Investments Limited (UKFI), the company set up to manage the Government's investments in both RBS and Lloyds, yesterday announced its strategy to return the banks to full private ownership.

John Kingman, UKFI chief executive commented: "Today UKFI is setting out a strategy to deliver on the tasks we have been given: maximising the value of these investments for the taxpayer, and returning the banks as strengthened institutions to full private ownership over time."

However, UKFI adds that it intends to do this at arms-length and that it does not intend to interfere in the day-to-day running of the banks, and has consequently come under fire from the liberal democrats, Liberal Democrat shadow chancellor Vince Cable comments:

"UKFI tells us it cannot interfere with the daily running of the banks but also believes it will be able to increase shareholder value. The two don't add up, especially when UKFI cannot even define how its own performance should be measured.

"Taxpayers bailed the banks out and in return, UKFI must start to act in the public interest and make it clear to the banks they own that they should operate in the same way," Mr Cable adds.

© Fair Investment Company Ltd