RBS wants to buy state shares worth up to £ 1.4bn business



The Royal Bank of Scotland intends to buy up to £ 1.4bn worth of Government securities as part of its efforts to reduce its public stake in the lender following its rescue in 2008.


The Bank requests the approval of the shareholders to acquire a stake of up to 4.99% from the Ministry of Finance. This would reduce government participation from around 62.3% to 60.3%.


The shares acquired by RBS would be canceled, leading to a smaller reduction in the overall share of the government, since fewer shares would be in circulation.


The move follows months of speculation about how the bank will use its surplus cash after spending as much as £ 240m on its first shareholder dividend in a decade last October. About £ 150 million of this was paid in by the Ministry of Finance.


RBS requires shareholder approval to initiate formal discussions on the repurchase. She will hold a General Assembly in Edinburgh on February 6 to gather votes.


Bank chairman Howard Davies said: "This resolution would give the bank the flexibility to use part of its excess capital to repurchase government shares at a time and at a price agreed with HM Treasury.


"The Board believes that this is in the best interests of the Bank and its shareholders in helping to facilitate the return of the Company to full private ownership."


RBS has been majority state-owned since 2008, when it received a GBP 45 billion bailout at the height of the financial crisis.


The government plans to sell the entire public share between 2023 and 2024, but is expected to lose around £ 28.5bn, according to the Office of the Budget.


The expected loss is the result of a fall in the price of the shares. Treasury paid 502 pence per share in 2008. The RBS share closed on Thursday at 237 pence.


The government sold 7.7% of its stake for GBP 2.5 billion last year after finding that the bank had made "significant progress in resolving its legacy issues".


This was after RBS reached US $ 4.9 billion (£ 3.7 billion) settlement with US regulators for allegedly mis-selling mortgage-backed securities in the run-up to the financial crisis. The sale of the shares, which has been the first since 2015, resulted in a loss of £ 2.1 billion. It is generally expected that the Ministry of Finance will sell another share of the shares within the next year.


A US Treasury spokesman commented on the RBS shareholder proposal: "The government should not be owned by banks. That's why we've committed ourselves to bringing RBS back to private ownership. However, we will only sell RBS shares if this is a good price / performance ratio.


"If that is accepted, the vote announced today does not oblige us to sell shares in any way and we keep all options open."




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