Labour announces plans to nationalise RBS as shareholders back buyback proposal
Royal Bank of Scotland, which is still majority owned by the UK taxpayer, yesterday won approval from shareholders to buy back shares from the UK Government.
At a meeting in at its Edinburgh headquarters, investors said that RBS could buy up to 4.99pc of its stock from the Treasury in any one year.
It would cost RBS around £1.5bn at current market prices.
The Government did not vote, but more than 98pc of voting shareholders approved the resolution, well above the 75pc threshold it needed to pass.
However, long-standing critic Neil Mitchell branding the move as “abhorrent”.
Mr Mitchell is seeking a judicial review of the decision last year by the Financial Conduct Authority to not take action against senior management at the bank over the treatment of small and medium-sized businesses (SMES) by its Global Restructuring Group (GRG).
He noted that his application has now been “superseded by a hearing at the Royal Courts of Justice”.
He pointed out that shadow chancellor John Mcdonnell has said the party would renationalise RBS if his party came to power, although he would not seek to exert day-to-day control of the lender.
As it stands, the UK Government will almost certainly make a huge loss on shares it bought for 501p each in order to rescue it from oblivion at the height of the 2008 financial crisis.
They are now worth just 250p, and estimates have put the total loss at close to £30bn.
At yesterday’s meeting, Mr Mitchell declared that the bank was making its buyback move because it was “running scared of a general election and the prospect of a Labour Government”.
RBS’s chairman Howard Davies, said that the bank had strong cash reserves to support the buyback.
And he pointed to the fact that it paid a dividend last year for the first time in a decade.
He added: “Those were important moments in the recovery of the bank and have allowed us to start thinking about how to distribute our excess capital.”
It will now be up to the Treasury to decide if it is willing to sell any of its 62.3pc stake to RBS.
Chancellor of the Exchequer Philip Hammond has said he wants to reduce the state’s shareholding to zero by 2024.