Meeting called for next month
RBS seeks buyback to hasten return to the private sector
Share purchases are planned by the bank (pic: Terry Murden)
Royal Bank of Scotland is looking to buy up to £1.4 billion worth of its shares from the government to help hasten its return to private ownership.
The bank has called meeting of shareholders on 6 February to seek approval for a purchase and cancellation of up to 4.99% from the Treasury. It will require 75% of the votes cast and if approved it would reduce the government’s stake from about 62.3% to 60.3%.
The move follows its return last October of £240m to shareholders in its first dividend for a decade.
RBS chairman, Sir Howard Davies, said: “This resolution would provide the bank with the flexibility to use some of its excess capital to buy back government shares at a time and price agreed with HM Treasury.
“The board believes that this is in the best interests of the bank and its shareholders by helping to facilitate the return of the company to full private ownership.”
RBS has been majority state-owned since 2008, when it received a £45bn bailout at the height of the financial crisis.
Despite the share price continuing to languish well below the break even price, the government has been keen to offload shares. It disposed of 7.7% for £2.5bn last year, losing £2.1bn in the process. It plans to sell the entire public stake by 2023-2024, although the Office for Budget Responsibility forecasts that it will make a loss of around £28.5bn. The Treasury paid an average of 502p per share in the rescue deal. RBS stock closed up 1% at 237p on Thursday.
The share buyback will be a first big test of the bank’s new chief financial officer, Katie Murray, who took up the role this month.
Commenting on RBS’s buyback proposal, a Treasury spokesperson said: “The government should not be in the business of owning banks, which is why we’re committed to returning RBS back to private ownership. But we will only sell RBS shares when it represents value for money to do so.
“If passed, the vote announced today does not commit us to sell shares in any one way and we keep all options open.”
The RBS General Meeting will be held on Wednesday, 6 February at 3pm at the RBS Conference Centre, RBS Gogarburn, Edinburgh. It will announce full-year results for 2018 on 15 February.