In a bid to reduce its stake it would give to the UK government for participating in the toxic assets insurance scheme, Royal Bank of Scotland (RBS) is planning to consider a GBP3 to 4 billion share issue – reported The Financial Times.
Reportedly, shareholders are still ruing for the losses of upto GBP12 billion invested in RBS’s rights issue at 200 pence per share in 2008, before the government had to step in and provide lifeline to UK banks directly. Against this backdrop, Stephen Hester, CEO of RBS, said that the plans are tentative and the bank is still in the process of approaching its major investors about a modest-sized share issue.
If this decision takes shape, RBS would be joining other banks like Lloyds that are scrambling to raise capital to avoid participating in the costly “bad bank” program. It has been reported that RBS is due to issue about GBP19 billion of non voting B shares to the government as a fee for allowing it to keep GBP325 billion of toxic assets. This move is expected to increase the government’s stake in RBS to approximately 85% from the current 70%, reported the newspaper.
