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April 7, 2009

RBS now 70% state-owned

by Gill Montia

Story link: RBS now 70% state-owned

The British taxpayer is set to own 70.03% of Royal Bank of Scotland (RBS).

The bank has failed to sell more than 0.7% of £5 billion worth of shares (offered at 31.75p) meaning the Government will take up the balance.

The surrender to a new level of state-ownership is connected to the bank’s original bail-out terms from October last year, when the Government assumed £5 billion in interest-paying RBS preference shares, as part of the rescue.

At this point the taxpayer’s interest in the business stood at 58%.

The Treasury then agreed that the preference shares should be converted into ordinary shares in efforts to reduce the bank’s costs but the sale of the stock was never expected to generate enthusiasm among investors.

What’s more, RBS’s participation in the Treasury’s Asset Protection Scheme could mean that the state will eventually own 95% of the group, as the bank has placed around £300 billion of “toxic” assets in the scheme.

Meanwhile, matters surrounding RBS’s £12 billion rights issue of last summer remain in the news.

Michael Lamoureux, who founded the RBS shareholder action group, has accused the bank of perpetrating “the biggest crime in financial history in the UK” when it embarked on the fundraising and legal action is planned.

 

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