|
| RBS may raise $8.1 bn in share sale |
| Bloomberg / London Sep 22, 2009, 00:18 IST |
|
Royal Bank of Scotland Group Plc, Britain’s biggest government-controlled bank, is in talks with shareholders to gauge the appetite for a potential rights offering, two people familiar with the talks said.
The bank held the discussions last week, said the people, who declined to be identified because the negotiations are still at an early stage. RBS may raise between £3 billion and £5 billion ($8.1 billion), one of the people said.
“I’d be surprised if they can achieve it. It’s ambitious,” said Julian Chillingworth, chief investment officer at London-based Rathbone Brothers Plc which manages $21 billion, including RBS stock. “There is concern that investors may be faced with quite a lot of cash calls in the sector. I’m not sure RBS shareholders will be that keen to subscribe.”
The government’s stake in the Edinburgh-based lender is set to increase to more than 80 per cent under the terms of the Asset Protection Scheme, the UK’s toxic asset insurance programme. RBS Chief Executive Officer Stephen Hester is seeking to limit that increase by raising cash from investors, one of the people said.
RBS raised £12.3 billion in a rights offer in June 2008 following its purchase of ABN Amro Holding NV by former CEO Fred Goodwin. That acquisition led the bank to report a £24.1 billion loss for 2008, the biggest by a UK company, after writedowns surged. Goodwin was ousted last year as the government provided a £20 billion bailout for RBS.
A spokeswoman for the bank declined to comment on the discussions. RBS has climbed 9.9 per cent in London trading over the past month, valuing the lender at about £30 billion. The stock fell 5.4 per cent to 53.25 pence at 11:30 a.m. today. The government paid an average of 50.5 pence a share for its stake.
RBS said in February it would sell as much as £19 billion of non-voting B shares to the government for placing £316 billion of toxic assets into the UK insurance plan. That sale would boost the government’s stake from its current 70 per cent.
Lloyds Banking Group Plc, 43 per cent owned by the taxpayer, is also considering a share sale to reduce its reliance on the government.
The bank agreed to insure £260 billion of risky assets with the government six months ago in return for a £15.6 billion fee.
RBS and Lloyds may both be forced by the European Union to sell assets and branches as a consequence of gaining state aid.
‘High Risk’
U.K. banks have raised £120 billion of capital to plug losses on loans and securities since the beginning of the credit crisis, Moody’s Investors Service Ltd said last week. British lenders are likely to record further losses of at least £130 billion, it said.
“It’s not surprising that RBS want to raise capital, as they don’t want to become more and more beholden to the government,” said Colin Morton, an asset manager at Rensburg Fund Management in Leeds, England which manages $2 billion. “RBS remains a very high-risk investment, as I’m very concerned about the economy over the next six to 18 months,”
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
Content Guide
