RBS could buy back shares to aid state sale

Royal Bank of Scotland could buy back its own shares to help the government sell down the taxpayer’s 73 per cent stake in the lender, chief executive Ross McEwan has revealed to investors.

RBS could buy back its own shares. Picture: Lisa Ferguson

McEwan’s comments yesterday come against the backdrop of the Treasury selling a 5.4 per cent stake in the bank at a loss of £1 billion in August and targeting the sale of three-quarters of its holding within five years.

The RBS boss, speaking at the Bank of America Merrill Lynch banking and insurance conference in London, said: “I would rather participate as the government is selling down… I think it’s probably the best thing for all investors, where excess capital goes back through buybacks.”

He added that RBS, which received a £45bn taxpayer lifeline when it nearly went bust with losses of £24bn in the financial crash, was on course to meet key financial targets.

The bank has said it is aiming for a core Tier 1 ratio – the capital that backs its loanbook – of 13 per cent, and plans to return any surplus capital to shareholders, with share buybacks an option.

However, McEwan warned “The potential conduct and litigation settlements have to be factored into this progress,” he said. “We’re dealing with these as quickly and as prudently as possible but they will continue to be a drag on this business for the next six to twelve months.”

Among ongoing investigations, US authorities are looking at claims the bank misled investors in mortgage-backed securities.