Royal Bank of Scotland (RBS): Investors agree on bailout

Investors in Royal Bank of Scotland (RBS) today agreed that the £20 billion bail-out plan should go ahead. The improvement of shareholders could now mean that 60 percent of the bank is put in public hands.

RBS shareholders voted 99.28 percent in favour of the bailout in the meeting today in Edinburgh. This will see RBS offering £15 billion in new ordinary shares, and the remaining share being brought by the UK government.

Royal bank of Scotland was one of the hardest hit by the banking crisis, and will shore up its finances by offering the shares. The government will also buy £5 billion in preference shares that the bank will buy back when it’s ready.

It’s likely that the shareholders will not want the shares that RBS will be offering them, due to the fact they are trading well below the 65.5p offer price, this would mean the taxpayer has the potential to own a 58 percent stake in the bank, however the taxpayer will also sit on a paper loss of around £5 billion on the shares.

Source: APGoogle