Royal Bank of Scotland could become fully nationalized

Sir Fred Goodwin spent nine years controlling the Royal Bank of Scotland (RBS) and become in 2000 the highest paid British banking chief, he also was the man behind the world’s largest bank merger as a result RBS become Europe’s number one lender in June 2008, with 1.73 trillion pounds of assets.

However this month, Royal Bank of Scotland may become the recipient of the biggest direct capital injection by a European Government, leading to Sir Fred Goodwin stepping down as CEO.

RBS share prices fell to 50.8p on November 24 from 366.5p back in March, Stephen Cockburn, managing director of The Investment Company Plc said this is “catastrophic”.

Goodwin’s takeover of National Westminster bank (NatWest) has been blamed for the fall of RBS according to Cockburn and then more recently the acquisition of ABN Amro Holding NV in 2007.

The government are underwriting a share offering for 65.5p this is almost 50 percent above the banks stock price, this offer ends November 25 and is intended to help bailout RBS. The UK taxpayer could end up owning around 60 percent stake In RBS, the government will also buy 5 billion in RBS preferred shares that will pay an annual interest of 12 percent.

Source: Bloomberg