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Chancellor Philip Hammond has indicated the government will make a loss when it sells its remaining stake in Royal Bank of Scotland (RBS).
The taxpayer currently has a 73% stake in the bank. Hammond told MPs 'we have to live in the real world' when it comes to selling the shares which were bought at an average price of 502p during the financial crisis. Shares in RBS jumped 1.6% to 228.2p on the news.
This is the first time the chancellor has admitted the government was likely to record a loss on the sale of its shares.
He told MPs that although the government was not currently looking to sell the shares, it would when it thought it could achieve fair value.
'The government is not at present actively marketing its stake in RBS. Our policy remains to return the bank to private hands as soon as we can achieve fair value for the shares, recognising that fair value could well be below what the previous government paid for them,' he said.
'We have to live in the real world and make decisions on the future of our holding in RBS in the best interests of taxpayers.'
When former chancellor George Osborne sold 5.4% of its shares in RBS in August 2015 it achieve a sale price of £2.1 billion, about £1 billion less than taxpayers originally paid.
Since then Hammond has rowed back on plans to sell the stake.