Menu
28/11/2008
Government To Buy RBS
The Government is to take up 57.9% ownership of the Royal Bank of Scotland.
The government will pay about £15bn for the majority stake in RBS after shareholders failed to buy a large proportion of the new shares the bank had offered.
It will also buy £5bn of preference shares in the bank.
This was not unexpected as the new share price offered was 65.5p; about 10p above the price at which the shares were trading.
Existing shareholders agreed to buy nearly 56m shares – that’s just 0.24% of the new shares on offer, at a cost of £36.7m, meaning an immediate paper loss of £5.6m.
The gap between the offer price and the current share value also means taxpayers have made an immediate paper loss of £2.3bn based on Thursday's closing share price.
There will be strings attached to the government ownership, which RBS shareholders voted in favour of last week - the bank will return to "normal" lending practices and will guarantee overdraft rates and contracts for its business customers for at least a year. There will be a loss of freedom in areas including pay and dividend policy.
RBS Chief Executive Stephen Hester said: "We regret that existing shareholders did not take up their pre-emptive rights but understand that market sentiment toward the banking sector made this uneconomic in the short term.
"There remain substantial uncertainties and challenges outside our control but for our part the job is underway."
The government's shares will be held by a company called UK Financial Investments Ltd, chaired by Philip Hampton, chairman of Sainsbury's and former finance director of Lloyds TSB.
The company aims to maximise value for taxpayers and prevent politicians making business decisions about banks.
(GK/KMcA)
The government will pay about £15bn for the majority stake in RBS after shareholders failed to buy a large proportion of the new shares the bank had offered.
It will also buy £5bn of preference shares in the bank.
This was not unexpected as the new share price offered was 65.5p; about 10p above the price at which the shares were trading.
Existing shareholders agreed to buy nearly 56m shares – that’s just 0.24% of the new shares on offer, at a cost of £36.7m, meaning an immediate paper loss of £5.6m.
The gap between the offer price and the current share value also means taxpayers have made an immediate paper loss of £2.3bn based on Thursday's closing share price.
There will be strings attached to the government ownership, which RBS shareholders voted in favour of last week - the bank will return to "normal" lending practices and will guarantee overdraft rates and contracts for its business customers for at least a year. There will be a loss of freedom in areas including pay and dividend policy.
RBS Chief Executive Stephen Hester said: "We regret that existing shareholders did not take up their pre-emptive rights but understand that market sentiment toward the banking sector made this uneconomic in the short term.
"There remain substantial uncertainties and challenges outside our control but for our part the job is underway."
The government's shares will be held by a company called UK Financial Investments Ltd, chaired by Philip Hampton, chairman of Sainsbury's and former finance director of Lloyds TSB.
The company aims to maximise value for taxpayers and prevent politicians making business decisions about banks.
(GK/KMcA)
Related UK National News Stories
Click here for the latest headlines.
15 January 2008
Northern Rock Shareholders' Proposals Defeated
An Extraordinary General Meeting with the Northern Rock board and shareholders at the Metro Radio Arena in Newcastle today has seen all but one of the proposals put forward by two shareholders defeated.
Northern Rock Shareholders' Proposals Defeated
An Extraordinary General Meeting with the Northern Rock board and shareholders at the Metro Radio Arena in Newcastle today has seen all but one of the proposals put forward by two shareholders defeated.
19 January 2009
Second Bank Bail Out Measures Announced
The Government has revealed a second package of measures to encourage banks to start lending again, and to help the sector through the financial crisis. Among the measures announced today was a scheme that would allow banks to exchange their cash or shares for a Government guarantee on their "toxic" debts.
Second Bank Bail Out Measures Announced
The Government has revealed a second package of measures to encourage banks to start lending again, and to help the sector through the financial crisis. Among the measures announced today was a scheme that would allow banks to exchange their cash or shares for a Government guarantee on their "toxic" debts.
08 October 2008
Interest Rate Cut Follows £50b 'Rescue Plan'
The Bank of England has sensationally slashed interest rates to 4.5%, on the same day Gordon Brown unveiled a radical £50b 'rescue plan' for UK banks. The interest rate move came earlier than expected, with a 0.5% cut being implemented by the central bank, as well as six others.
Interest Rate Cut Follows £50b 'Rescue Plan'
The Bank of England has sensationally slashed interest rates to 4.5%, on the same day Gordon Brown unveiled a radical £50b 'rescue plan' for UK banks. The interest rate move came earlier than expected, with a 0.5% cut being implemented by the central bank, as well as six others.
03 May 2013
RBS 'Could Be Privatised' By Next Year
The chairman of the Royal Bank of Scotland (RBS) has said the bank will be set to return to the private sector next year. Sir Philip Hampton made the comment in a video statement on the bank's website after the institution reported a return to profit for the first three months of the year.
RBS 'Could Be Privatised' By Next Year
The chairman of the Royal Bank of Scotland (RBS) has said the bank will be set to return to the private sector next year. Sir Philip Hampton made the comment in a video statement on the bank's website after the institution reported a return to profit for the first three months of the year.
17 June 2013
Bonds For Shares Plan Unveiled To Save Co-op Bank
A rescue plan to fill a £1.5 billion hole in the Co-operative banks balance sheet has been unveiled. A major part of the plan is to offer bond holders the chance to buy shares in the bank – a move to generate capital called a "bail in".
Bonds For Shares Plan Unveiled To Save Co-op Bank
A rescue plan to fill a £1.5 billion hole in the Co-operative banks balance sheet has been unveiled. A major part of the plan is to offer bond holders the chance to buy shares in the bank – a move to generate capital called a "bail in".
-
Northern Ireland WeatherToday:It will be cloudy again throughout the day. Mainly dry in the morning, but patchy drizzle in places, becoming more widespread and persistent in the afternoon. Freshening southwesterly winds. Maximum temperature 12 °C.Tonight:Cloudy with a spell of heavy rain pushing south through late evening and the early hours, followed by some clear spells. Minimum temperature 6 °C.
