London: Britain’s Royal Bank of Scotland is considering approaching the market for extra money to avoid giving more control to the government, reports said Sunday, the second bank to mull such a move.
RBS, which is 70% owned by taxpayers after being bailed out in the global financial crisis, is preparing to join the government’s insurance scheme for toxic assets, the reports said, citing unnamed sources.
But it is also considering a £3-4 billion (€3.3-4.4 billion, $4.8-6.4 billion) share issue to reduce the stake it would hand the government for joining its Asset Protection Scheme.
RBS chief executive Stephen Hester is still “putting out feelers” to its shareholders about a “modest-sized” share issue, the Financial Times reported on its website.
“RBS are looking to gauge investor appetite for a small, modest equity issue,” a source was quoted saying.
RBS could put £325 billion worth of toxic assets into the scheme, which provides guarantees for risky assets, and would have to issue £19 billion of non-voting shares to the government as a fee, the newspaper said.
Raising fresh capital by issuing new shares could stop the government’s share of the bank increasing from 70% to a possible 84.5%, the BBC said.
As part of considerations on the move, RBS has consulted with its single largest shareholder, the UK Financial Investments, the body set up to manage stakes in commercial banks in the wake of the financial crisis, the BBC said.
RBS was ravaged by the credit crunch and the 2007 takeover of Dutch bank ABN Amro at the top of the market, but its share price has rebounded from lows in January. RBS has declined to comment on the reports.
Part-nationalised bank Lloyds said last week that it was also considering alternative options to the Government Asset Protection Scheme, citing improving economic conditions.