RBS in third rescue package as it moves closer to nationalisation
Royal Bank of Scotland (RBS), which today entered the history books with the largest UK corporate loss, is set to receive a further £13 billion injection from the Government in return for more shares.
The latest injection of funds means the taxpayer’s stake in Britain’s second largest bank could reach as high as 95% and brings the bank nearer to full nationalisation. However, the Government has pledged to keep its holding of voting shares under 75%.
The latest bailout will enable the bank to sign up to the Government’s Asset Protection Scheme that will transfer most of the risk from £325 billion worth of toxic assets and risky loans to the taxpayer.
Newly-appointed chief executive Stephen Hester said “Participation in this scheme would assist us in reducing risk for shareholders whilst providing greater support for UK customers via increased lending“.
Lloyds Banking Group is also expected to take part in the scheme which will clean up banks’ balance sheets and increase lending. However Lloyds said today that it is holding talks with the Treasury about its participation in the scheme but there was no guarantee its involvement would be under the same terms as RBS.
RBS will have to bear the first £19.5 billion of losses from the bad loans but after that, 90% of the losses be the taxpayer’s responsibility.
Newly-appointed chief executive Stephen Hester said “Participation in this scheme would assist us in reducing risk for shareholders whilst providing greater support for UK customers via increased lending“.
Meanwhile, RBS announced earlier this week it was to embark on a major restructure which will see it sell off at least 20% of its business worth around £300 billion.
The bank is also set to withdraw from about half of the 60 countries in which it operates, which includes parts of Eastern Europe and Asia.
However, jobs are expected to be lost with a headcount reduction of between 10% and 20%, according to reports. This is on top of the thousands of positions which have already been eliminated.
Since early 2007, RBS shares have lost 95% of their value, however, in afternoon trading today, the stock gained 17% to 27.1p, while Lloyds Banking Group rose 24% to 71p.
Comments (0)
Trackback URL | Comments RSS Feed
There are no comments yet. Why not be the first to speak your mind.