Royal Bank of Scotland sells its shares to reduce the overall stake

image Royal Bank of Scotland is considering selling as much as 4 billion pounds ($6.5 billion) of shares to existing investors in a move that would reduce the overall stake handed to the government under its asset-protection scheme, according to published reports.

The bank is questioning investors on whether they would be interested in purchasing 3 billion to 4 billion pounds of B-shares following the strong rally in bank stocks over the past several months, The Wall Street Journal reported.

The plan would modestly reduce its use of the government’s asset-protection scheme, under which it agreed to insure about 300 billion pounds of bad assets earlier this year, the newspaper said.

The Financial Times reported that RBS’s chief executive, Stephen Hester, has been putting out feelers to the bank’s biggest shareholders over the idea.

Shares in RBS fell 0.4% in early London trading Monday, broadly matching a decline for the U.K.’s main FTSE 100 index. The stock has slumped 74% over the past 12 months but is now more than five times higher than the low it hit in January, raising the possibility that it could attract more cash from shareholders.

The government already holds around a 70% stake in RBS and that figure could rise to around 85% once the asset-protection scheme has been paid for.

The Journal reported that while RBS would like to reduce its reliance on the government, it is still committed to the general terms of the asset deal.

Lloyds Banking Group, the other U.K. bank that had agreed to join the asset-protection scheme, said Friday that it is looking at options to reduce its participation in the program or avoid it altogether.

Lloyds had been planning to insure around 260 billion pounds of assets under the scheme, but said recently that it believed bad-debt charges had peaked. That led some analysts to question whether it still needed to take part in the program.
Source: MarketWire


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