Govt could take five years to offload bank stakes

The Government could take until 2015 to offload the bulk of its stakes in the UK's partly nationalised banks, longer than many fund managers were expecting.

According to the BBC, UK Financial Investments' could take another five years to sell its £40bn investment in RBS, Lloyds and Northern Rock - despite expectations it could recoup the taxpayer money sooner.

Schroders head of UK equities Richard Buxton says while it is speculated the Government would like to offload a small stake in the banks before the upcoming election, he believes the move would be untenable.

The £1.8bn Schroder UK Alpha Plus manager, who holds both RBS and Lloyds, says the stakes could begin to be sold by about 2013 - at a time when earnings start to normalise at the institutions.

New Star Global Financials fund manager Emily Adderson says further clarity on future banking regulation is needed before any timetable can be made on the Government's selloffs.

"From a shareholder point of view obviously you would prefer the overhang of Government ownership not to last any longer than needed," she says.

"It does have a drag on banks' strategies and a drag on the ability to pay dividends and the like.

"But it needs to be done on a time when the banks can stand on their own two feet."