Dutch taxpayers moved a step closer to recouping some of the cash spent propping up failing banks during the global financial crisis, while U.K. government stakes in its lenders remain firmly underwater and mired in litigation and performance concerns.
NFLI, the Dutch government agency tasked with managing state-controlled assets, agreed the sale of its stake in bailed-out lender ABN Amro, almost a year to the day the bank returned to the stock market in a part-privatization.
The U.K. government has been less fortunate; after injecting £45 billion ($56.2 billion) into the Royal Bank of Scotland (RBS) since 2008, it now faces steep losses given that the bank has a market capitalization of just £24.6 billion.
Further deepening the gloom, James Leigh-Pemberton, chairman of U.K. Financial Investments, which manages the government's stake in RBS, told lawmakers on Britain's Parliament's Commons Treasury Committee Wednesday that RBS could face a fine of between $5 billion and $12 billion from the U.S. Department of Justice linked to mortgage back securities sales in the run-up to the crisis.
But while the Dutch look set to break-even on its estimated €32 billion rescue if ABN shares rise a further 15%, British taxpayers are still staring at a loss of at least £12.5 billion.
NFLI sold 65 million shares in ABN, equivalent to a 7% stake, for a price of €20.40 -- that's a 15% premium to the price it got last November when it floated 188 million shares in the initial stake sale.
Britain's UKFI sold £2 billion worth of RBS shares in August 2015 in its first attempt to shed its then £32 billion stake in the failed lender. Buyers paid 330 pence each for the sale, a 34% discount to the government's estimated 2008 cost of 502 pence each. It also has a 9% stake in Llloyds Banking Group, which it holds at an estimated cost of 73.6 pence each, some 18.5% higher than the current 60 pence market price.
RBS shares were quoted at 206.7 pence each Thursday in London and have fallen a staggering 31.7% so far this year, compare to a 2.1% year-to-date decline for ABN Amro.
ABN reported operating income of €2.2 billion for the third-quarter on Wednesday, which was ahead of the Factset consensus for income of €2.1 billion. Adjusted-net income came in at €607 million, substantially ahead of €398.5 million, although it did little to lift the shares given expectations of an imminent sell-down by the government.
Edinburgh-based RBS reported a net loss of £469 million in its third quarter, an improvement on its £1.1 billion loss three month, but warned it would miss an EU deadline for selling 300 branches as part of its rescue.
It's also been saddled with myriad litigation concerns, and only last month set aside £400 million to compensate some of its small-business customers for past mistreatment.
Even beyond the $12 billion DoJ risk, RBS faces a March 2017 shareholder lawsuit which alleges that the bank mislead investors as to the true vulnerability of its financial position when it pitched them a £12 billion capital raise.
Reuters reported Wednesday that former employees have told litigants that the bank knew some of the mortgage-backed-securities on its balance sheet were overvalued and that it needed to mark them down.
The claims might make it more difficult for the bank to defend against the claims of past investors and could increase the chances of it having to fork-out for another settlement over the coming quarters.
Not to mention finally returning cash to Britain's long-suffering taxpayers.