UK chancellor Philip Hammond has conceded that the British government may be forced to sell the UK taxpayer’s stake in Royal Bank of Scotland (RBS) at a loss.

The UK government bought its 72% stake in RBS for about £45.5 billion in 2008 — at £5.02 a share — as part of a state bailout at the height of the financial crisis.

But shares in RBS are currently trading at around £2.25 — less than half of what the UK taxpayer paid for them.

Hammond said in the UK House of Commons on Tuesday that “fair value could well be below what the previous government paid” for RBS shares.

“The Government is not at present actively marketing its stake in RBS,” said Hammond.

“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.

“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.”

Hammond has previously said the Government does not expect to offload its 72% stake in RBS until after 2020.