Taxpayers face £2.7bn RBS charge

Published on Tuesday 25 November 2008 20:31

TAXPAYERS were sitting on paper losses of about £2.7 billion yesterday as the deadline for Royal Bank of Scotland's £15bn cash call expired with its shares in the market well below the offer price.

The government has agreed to buy any of the 22.9 billion new shares not taken up by existing shareholders to shore up RBS's finances.

City banking analysts said yesterday that, with the share price closing yesterday at 53.60p, well below the 65.5p offer price, institutional investors are likely to have snubbed the issue.

That would leave the government owning a 58 per cent stake in the Royal.

Among leading institutions thought not to have taken up their rights in the offer are Legal & General, with a 5 per cent stake, and Barclays Global Investors, with 3 per cent. Neither would comment yesterday.

RBS's board, led by chairman Sir Tom McKillop, have said they will subscribe for shares. Directors own about 3.2 million shares, representing 0.02 per cent of the shares in issue. RBS will announce the results of the share offer by Friday.

The government has also committed to buying 5bn in preference shares – which impose restrictions such as a ban on dividend payouts until RBS buys the shares back.

Citigroup yesterday rated RBS shares a buy in the medium term, with a price target of 100p.