A report carried out by PricewaterhouseCoopers LLP, expects that Governments around the world that have intervened to support Financial Institutions in response to the global financial crisis will need to prepare for long term involvement and ownership. The report, called ‘Back to the future,' suggests that the complexity of individual FI situations, difficult market conditions and an unattractive disposal environment combine to make the possibility of governments' exiting their stakes in the private sector in the short term highly unlikely.

Jon Sibson, (PICTURED) partner and UK government and public sector leader with PwC, commented that, "realistically, for many Governments around the world it will take years to dispose of their stakes in financial institutions. It could easily take two to three years to sell major stakes, but up to five to seven years before Governments are able to fully divest of their stakes and related guarantees."

A recent online consumer survey by Opinium Research of over 2000 people, on behalf of PwC, showed that 62% of UK respondents felt that Government action had not restored trust in banks. Ensuring that trust is rebuilt is an important plank for the Government and will continue to be given the Government's stakes in financial services. Based on the experience of bailing out banks in countries such as Sweden, Norway and Japan and recent bank privatisations in Central and Eastern Europe, current expectations for early sales of large government stakes are misplaced. The key lesson from past privatisations is that the FIs or non-bank firm needs to be cleaned up prior to sale. Where governments have not already nationalised troubled banks, they need to create mechanisms for dealing with non-performing assets, which might include ‘bad banks' or other asset securitisation vehicles so that when a bank is returned to the private sector it is in sound financial health.