Government takes 57.9% stake in RBS

28-11-2008

Government takes 57.9% stake in RBS
The government will own 57.9 per cent of the Royal Bank of Scotland after shareholders took up a fraction of the bank's open offer.

Shareholders bought just 0.24 per cent of the new RBS shares on offer, leaving the government to pick up the majority, which was expected, as the offer price of 65.5p was around 10p higher than the trading value of the shares.

The government will now become the majority shareholder in the bank, paying around £15 billion for its stake, in addition to £5 billion in preference shares.

The share issue was part of the government's recapitalisation scheme, and was approved by shareholders last week.

Existing shareholders will not receive any dividends until the bank has bought back the preference shares from the Treasury.

The bank had to agree to several other conditions to receive the cash, including restrictions on executive pay and an agreement to continue lending to individuals and businesses.

Last week, RBS committed to keeping overdrafts for small businesses.

The news was welcomed by industry, as there have been complaints that banks have been withdrawing vital overdraft facilities for small firms, in some cases replacing them with more expensive loans.

As of 08:35 BST, RBS shares were trading at 55p.

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