UK Government Investments (UKGI) sold 925 million shares overnight for £2.5bn at 271p per share, almost half the £4.63bn paid by the government in 2008 at 500p per share.
The return is also below the sale price of the first tranche of RBS shares in 2015 which went for 330p per share and realised a loss of £1.1bn.
And it is well below the National Audit Office’s stated break-even price of 625p per share – meaning the loss to taxpayers could stretch to as much as £3.2bn.
The sale reduced the government’s shareholding of RBS by 7.7% to 62.4%.
Chancellor of the Exchequer Philip Hammond (pictured) said: “This sale represents a significant step in returning RBS to full private ownership and putting the financial crisis behind us. The government should not be in the business of owning banks.
“The proceeds of this sale will go towards reducing our national debt – this is the right thing to do for taxpayers as we build an economy that is fit for the future,” he added.