Royal Bank of Scotland is lining up a cut to the government’s stake in the bank by buying up to £1.4bn worth of shares from the Treasury.
The government currently holds a just over 62 per cent stake in the bank. The Guardian reports that RBS is seeking shareholder approval to buy up to a 4.99 per cent stake back from the government with a view to cancelling the shares.
Votes are due to be collected at a general meeting in Edinburgh on 6 February, since shareholder approval is required before RBS launches formal discussions about any buyback.
The paper quotes chairman Howard Davies as saying: “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.”
Having bailed out the bank to the tune of £45bn during the financial crisis ten years ago, the government had planned to return RBS to private ownership around 2022-23.
But fears remain that without a rebound in the bank’s share price – which is now less than half what the Treasury paid – the government will take a multi-billion pound loss in the process.
A Treasury spokesperson tells the Guardian: “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.”