RBS investors in push to create shareholder committee

Shareholder groups want individual investors to have more say in how RBS is governed. Picture: John Devlin
Shareholder groups want individual investors to have more say in how RBS is governed. Picture: John Devlin
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About 160 investors have urged Royal Bank of Scotland to bolster its corporate governance by installing a new “shareholder committee” to avoid any rerun of the bank’s near-implosion in 2008.

ShareSoc and the UK Shareholders’ Association (UKSA), Britain’s biggest groups representing retail investors, have requisitioned a resolution – set to go before the next RBS annual meeting in May – for the bank to set up the committee.

Transparency and formal engagement will help to prevent poor stewardship

John Hunter

The groups said that they would be “delivering the resolution and a large bundle of associated requisition forms to RBS’s London offices” today.

Mark Northway, ShareSoc’s chairman, said: “One objective is to stop the events that took place at RBS from ever happening again.

“A dominant CEO, concealing the true financial position of the company from investors, proceeding with a reckless acquisition, and then publishing a rights prospectus which concealed the problems faced by the company. These are not examples of good governance.”

READ MORE: RBS reaches £800m settlement over 2008 rights issue

The move comes as RBS is still facing legal actions in 2017 from the RBoS Shareholder Action Group and the RBS Rights Issue Action Group alleging the bank’s prospectus for its rescue £12 billion rights issue in 2008 misled investors as to the financial strength of the bank.

It later made a record £24bn loss for that year and tumbled into majority taxpayer control, with the loss-making bank still 72 per cent owned by the state.

Northway said that shareholders, including individual investors, “deserve a new approach, one with greater involvement and more effective input from them as ultimate owners”.

John Hunter, chairman of UKSA, added: “Most large shareholders are intermediaries who tend to act in their own interests and not those of the ultimate beneficial owners (ie, the people they represent).

“This needs to change and this proposal is a step towards that. Transparency and formal engagement will help to prevent poor stewardship.”

RBS’s share price closed last night down 1.6p at 223.7p, compared with a taxpayer buy-in price of up to £5. ShareSoc and UKSA’s shareholder committee proposal was developed with Gavin Palmer, an outspoken RBS shareholder who interrupted the bank’s AGM in 2013 to hand out a petition calling for a committee on the board.

UK business secretary Greg Clark announced a new package of corporate governance reforms in November which could require firms to provide seats for workers on company boards.

RBS must now decide whether the proposal meets the correct requirements to face a vote at its AGM on 4 May.

A spokesman said: “We have not yet received the final draft resolution. Once it has been delivered we will look closely to ensure that it complies with all corporate governance and listing lines.”

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