PRICEWATERHOUSE COOPERS REPORT: "Any hopes of a swift government exit are misplaced"

• Governments could take up to seven years to sell their stakes in banks

Governments may need up to seven years to sell their stakes in banks bailed out during the financial crisis, due to the complexity of the bailout agreements, as well as due to the economic environment which is unfavorable to any divestment, according to a report by the consulting firm "PricewaterhouseCoopers" (PwC).

Citing the experience of bailing out banks in countries such as Japan, Norway and Sweden and recent bank privatizations in eastern and central Europe, the report, which was published yesterday, shows that hopes of a rapid sale of the stakes governments hold in the various banks are "an illusion".

"It could 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," said Jon Sibson, a partner at PwC.Given the limited chance of a quick exit, governments should focus on influencing issues from the inside, by rebuilding confidence and trust in the financial system.

"The most important lesson from past privatizations is that the financial institutions or non-bank firms need to be cleaned up prior to sale," the report by PwC said.

Exit routes will necessarily differ as governments have adopted different bailout policies, ranging from providing credit to purchasing toxic assets to nationalization.

The UK has nationalized Northern Rock and taken major stakes in "Lloyds Banking Group" and "Royal Bank of Scotland", while Germany has nationalized "Hypo Real Estate" and taken a stake in "Commerzbank".

In turn, the Dutch government has nationalized "ABN AMRO" and "Fortis Bank Nederland", Ireland has nationalized "Anglo Irish Bank" and taken indirect stakes in its top two lenders, and other European governments have provided support to their domestic banks.

The United States has provided billions of dollars to recapitalize some of its largest banks, which included injecting $45 billion into "Citigroup" alone.