The City reacted coolly today to radical proposals for the privatisation of the bailed-out banks Lloyds and Royal Bank of Scotland, put forward by the Conservative-linked think-tank Policy Exchange.
It suggested giving taxpayers between £1100 and £1650 of free shares in the banks, which they would only cash in once they were in profit. If the shares did not show a profit after 10 years, they would go back into Government ownership.
But Shailesh Raikundlia, analyst with Espirito Santo, said: “We believe the scheme would be logistically difficult to implement with the cost likely to run into millions.
“The scheme would also probably not be as fair as politicians would like to think, in our view.”
Instead, City analysts seemed to prefer the idea that Chancellor George Osborne could announce a sale of around a quarter of the taxpayer’s 39% stake in Lloyds later this year at his Mansion House speech next week.
Any sale of RBS shares is likely to be put off for some time.
David Buik of broker Panmure Gordon is against a fast sell-off by the Treasury.
“Let the Government and the UKFI ruminate for a bit longer,” he said “Scoring a cheap political point for the sake of electoral votes could be madness and not expediency.”
Lloyds shares today dipped just 0.25p to 62p — 1p above the bailout cost.
