This comes via the Telegraph:
UK Financial Investments (UKFI) said in its annual report that its loss on the two stakes – 70pc of RBS and 43pc of Lloyds Banking Group – had reached £10.9bn at the end of June.
The losses, which are not yet realised, have been wracked up since Gordon Brown was forced to inject billions into the troubled lenders in October.
The investment, which amounts to more than £3,000 that each UK household, will not be quickly disposed of. The recession is continuing to hit both banks hard.
“Given the size of our holdings and assuming that there might not be a strategic buyer for our stakes in these banks, we might expect to undertake several transactions in each bank’s shares, and that these will take place over a sustained period,” UKFI said.
The Treasury is hoping that the disposals of its stakes will eventually generate a profit for the taxpayer, after bailing out the banks when the system almost collapsed at the end of 2008 in the wake of the failure of Lehman Brothers.
Analysts at UBS have speculated that Lloyds could be forced to write off as much as £13bn on mortgage and commercial property lending, and lending to businesses, when it posts its results for the first half of the year on August 5.
You can forget about generating profits. It’s not going to happen. After all, we’re looking at another £13 billion in losses. The UKFI should focus on mitigating losses. That is a believable story.