Osborne sells Royal Bank of Scotland stake

After years of heavy losses, Royal Bank of Scotland is making money again and is actually beating expectations. Last week's half-year numbers were a perfect example. Clearly, the lender was preparing itself for full privatisation, but few believed the government would begin selling down its 78.3% holding within days.

Fifteen minutes after the stockmarket closed on Monday, the company set up to manage the Government's banking assets - UK Financial Investments Limited (UKFI) - confirmed that it would offload a 5.2% stake in RBS via a placing of around 600 million shares. That will shrink its interest in the high street bank to about 73.2% and its holding of ordinary shares from 61.3% to 52%.

An accelerated bookbuilding process is underway. Once it's complete we'll know what price the Treasury received for the shares. This will be the only sale of shares for at least three months, said UKFI, without specific permission from those brokers running the sale.

RBS shares fell 1.3% Monday to 337.6p, but it's been reported that so-called bookrunners - Citigroup, Goldman Sachs, Morgan Stanley and UBS – will get the placing away at 325-330p.

Osborne said in June that he'd start selling RBS shares soon, but they're down almost a fifth since February and are now back at support levels below which they've rarely traded in over a year. Lucky investors who bought for pennies after the financial crash will be quids in, but there'll be thousands more long-term shareholders, including RBS employees, who'll be wondering why the chancellor couldn't wait.   

*UKFI confirmed Tuesday it has raised almost £2.1 billion from the sale of 630 million RBS shares - a 5.4% stake - at 330p each. It now owns 51.5% of the bank's shares, but has an economic interest in the business of 72.9%, down from 78.3%.