RBS outlines £19.7bn recapitalisation plan
by Gill Montia
Story link: RBS outlines £19.7bn recapitalisation plan
Royal Bank of Scotland (RBS) has published its recapitalisation plans, which could involve making use of £19.7 billion of the Government’s £50 billion bail-out fund.
In addition to issuing a warning on profit, the group, which includes NatWest, said it had written down £206 million in the third quarter of the year.
The writedown compares with a figure of £5.9 billion for the six months to the end of June but the bank has made use of recently introduced EU accounting rules that allow a more generous valuation of assets than the earlier regime.
The recapitalisation involves the Government buying £5 billion of RBS preference shares and underwriting a £15 billion ordinary share offer, at 65.5p a share.
Lack of enthusiasm by shareholders, many of whom subscribed to the bank’s £12 billion fundraising in the summer, could leave the taxpayer with a 58% stake in the bank.
RBS’s new chief executive, Stephen Hester, who will be officially taking up his post later this month, is undertaking a far-reaching strategic review of the business, which will in future focus its retail operations.
Job losses are expected and shareholders can expect a dividend in 2009, if all goes to plan.
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