CHANCELLOR Philip Hammond has admitted that the UK Government is prepared to sell its stake in Royal Bank of Scotland (RBS) at a loss to the public purse.

The Government bought its 72 per cent stake in the bank for £45 billion in 2008, at £5.02 a share, as part of a bailout at the height of the financial crisis but shares in the troubled lender are now trading at less than half that price at £2.23.

Hammond said: “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.

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“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.”

It is understood that only once RBS issues like fines in the US and state aid obligations are dealt with that the government will begin selling down the taxpayers’ stake.