Yesterday, the International Monetary Fund suggested the Coalition Government should implement a clear strategy to re-privatise both RBS and Lloyds, saying that "any strategy should seek to return the banks to private hands in a way that maximises the value for taxpayers”. The CPS has, for the last two years, championed a solution that would do just that. Give us Our Fair Shares, authored by James Conway, Toby Fenwick and Michael O’Connor for the CPS in 2011, explained how distributing the shares to the public whilst setting a ‘floor price’, below which the shares could not be sold, would allow a rapid re-privatisation of the bank without a collapse in the share price. Any profits as the share price rises would accrue to the public, who bore the risk of the initial bail-outs.
In a recent blog, Ryan Bourne set out how any re-privatisation of the banks would entail problems, and how the proposal – initially devised by the Portman Capital partners who authored the CPS paper – is the least bad solution on offer, both in terms of the economic and political considerations politicians face.
This idea has been a slow-burner, but it now appears it is being taken seriously at the heart of government. Last week, The Times reported that the Prime Minister had given his support to the sort of re-privatisation which entails “people owning this bank in a genuine way”. This comes following supportive comments in the past from politicians on both sides of the Coalition, including Nick Clegg, John Redwood, Vince Cable, Danny Alexander, David Davis, Steve Baker and Matthew Hancock.