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RBS bail-out plan is approved
21.11.08
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Shareholders in Royal Bank of Scotland approved a £20 billion bail-out plan which could put nearly 60% of the company in public hands.
At a general meeting of the RBS Group in Edinburgh, shareholders voted 99.28% in favour of the proposal, which will see the bank offer £15 billion in new ordinary shares, with the Government promising to buy up any remaining.
The Government has also committed to buying £5 billion in preference shares which RBS will buy back in time. Royal Bank of Scotland - one of the worst hit by the banking turmoil - is bolstering its finances by offering the shares.
The company's outgoing chairman Sir Tom McKillop and chief executive Sir Fred Goodwin, who is stepping down, both apologised to shareholders for the situation the company had found itself in. Sir Tom said: "A new chapter in the RBS story must now begin."
A full strategic review of the company under the helm of new chief executive Stephen Hester is to be started. He conceded that job losses were expected, but pledged to bring a "sense of optimism" to the company.
Existing shareholders have until Tuesday to take up the offer, but because shares are trading well below the 65.5p offer price investors are likely to snub them. This leaves the taxpayer - currently sitting on a paper loss of around £5 billion on the new shares - with a potential 58% stake.
The meeting took place at the Assembly Hall on The Mound in the Scottish capital. Addressing shareholders, Sir Tom said they faced "unprecedented" challenges as an institution, a country and part of the world financial system.
"I, as chairman of RBS group, both personally and in the office I hold, am profoundly sorry about the position we have reached," he said. "I feel this sincerely, on a number of levels and for a variety of reasons, but I want to highlight just a few.
"I am sorry about the very real financial and therefore human cost that those who have invested in us now feel and recognise how seriously this has impacted shareholder confidence in our RBS. And I am also sorry if any of our customers have suffered anxiety as a result of the situation."
Sir Tom, who retires as chairman next year, added: "The buck stops with me as chairman and with the leadership of the group. Accountability has been allocated and fully accepted."
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Of course the shareholders approved the RBS bail out without which the bank will fail and their shares would be worthless. However no such good fortune for RBS customers who have difficulty in repayment of loans, overdrafts and mortgages. The bank would just repossess and make customers bankrupt. At least in the US, Fannie Mae and Freddie Mac have suspended foreclosure to 9th Jan 09 to help customers remortgage or get financing elsewhere. When will this government insist that in return for bailout taxpayers money, banks have to behave responsibly and stop being greedy and selfish. Government controlled and taxpayer owned Northern Rock is not doing this.
- George, London, UK
Their shareholders...? How about a proper, substantive apology to their customers, without whom they could not exist, and many of whom they have put through something akin to hell.
- Toby Webster, Ongar, England
