Taxpayer Now Majority Owner of Royal Bank of Scotland

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Taxpayer Now Majority Owner of Royal Bank of Scotland

Fri, 28 Nov 2008

The Royal Bank of Scotland has confirmed that the taxpayer is now its majority owner following the government’s £20 billion bail out. The bank has attempted to raise funds through a share issue in recent months, though less than a quarter of the new shares have been bought, leaving almost all of the new shares in the hands of the government. Consequently, the taxpayer now owns £57.9 per cent of the business, which had been Britain’s second biggest bank prior to the credit crunch, having been worth £60 billion.

The unpopularity of the new shares is hardly surprising, however, as the 65.5p asking price per share is above the level the company’s shares are currently trading at. Furthermore, shareholders will not receive any dividends until the government’s £5 billion worth of preference shares are paid off.

It is the second time this year that RBS has embarked on a fundraising campaign. The bank had already performed a £12 billion rights issue in April – the biggest ever seen in London. The fundraising follows a period of aggressive investment under Sir Fred Goodwin’s leadership, which saw the bank acquire NatWest, ABN Amro and several other companies.

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