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Taxpayers take control of RBS with 57.9% stake
Nick Goodway28 Nov 2008
Taxpayers now own the majority of shares in Royal Bank of Scotland (RBS) after existing shareholders rejected a £15 billion new share issue.
RBS becomes the first bank to be part-nationalised under the Treasury's £37 billion bailout scheme. Lloyds and HBOS will join it when they complete their merger next January.
The Government will have a 57.9% stake in the NatWest owner, on which it has already suffered a paper loss of £3.1 billion. Trading in the new shares begins on Monday morning. Today, the old shares fell 2p to 52p. This is 13.5p below the 65.5p at which the Government stake was placed.
It was no surprise that existing shareholders rejected new shares at such a premium to the market price. Indeed, eyebrows were raised that 56 million shares have been subscribed for by existing investors - although that is dwarfed by the 22.8 billion shares left for the Government to pick up.
The Government is also buying £5 billion of preference shares with annual interest of 12%. RBS cannot pay a dividend on ordinary shares until it buys back those preference shares.
Stephen Hester, the new chief executive of RBS, said: "We welcome completion of the capital-raising process that has strengthened RBS considerably."
He said RBS must put the past behind and move forward with a clear focus.
"Our mission is to serve the interests of all our shareholders, large and small," he said. "We will succeed only by serving our customers well. This business reality is one we take seriously. There remain substantial uncertainties and challenges outside our control but for our part the job is underway," he added.
Today also saw the completion of Barclays' £7 billion fund-raising after it bowed to investor pressure and allowed existing shareholders access to a larger slice of its cash-raising. Barclays rejected the offer of Government money and instead sought to raise new capital from foreign sovereign wealth funds.
Trading in the notes, which were mainly issued to Qatar and Abu Dhabi, as well as in the reserve capital instruments which bolster its capital ratios, began this morning.
Reader views (5)
Does this mean their workers will have to do daily exercises in the morning followed by a rendition of The Red Flag before they start work?
Karl Marx has finally got a true successor!
- Melvyn Windebank, Canvey Island, Essex, 30/11/2008 15:59
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Does this mean the Government has to make an offer for the remaining shares?
- Anthony Ashton, London, United Kingdom, 28/11/2008 20:51
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That means I have a 57.9% stake in my own mortgage and a couple of insurance policies. I therefore call an Extraordinary General Meeting in my household and vote to reduce my payments on all RBS products by this amount. That'll sort out the Xmas pressies!
- Nobby Clark, Perth, Scotland, 28/11/2008 14:15
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As one of the millions of tax payers, we now have a "share" of RBS. But that's no comfort for us because for 14 years RBS has ruined our lives financially in a case of their mismanagements and making errors to our accounts, the mis-selling of finance insurance policies plus much else. All this happened to us 14 years ago and we continue to fight RBS for a just resolve. They say to us, in writing, "sorry" but never compensate us for the ruin and distress that they caused us.
We should all of us as taxpayers and I suppose part shareholders, be very, very wary of RBS, as we know only too well to our cost.
- Bernard Lockett, Folkestone, Kent., 28/11/2008 12:11
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Perhaps they may now pass on the last interest rate reduction of 1.5% on my one account
- Ian, Hove, sussex, 28/11/2008 10:16
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