British government to become major stakeholder in RBS bankNovember 28th, 2008 - 9:51 pm ICT by IANS
London, Nov 28 (DPA) The British government is to become a majority stakeholder in the Royal Bank of Scotland (RBS) after shareholders failed to respond effectively to a cash-raising call.RBS, which is Britain’s second largest bank, based in Edinburgh, has been hard-hit by the credit crunch, reporting write-downs of nearly 6 million pounds ($9 million) and losses of 692 million pounds for the first half of this year.
“We regret that existing shareholders did not take up their pre-emptive rights but understand that market sentiment towards the banking sector made this uneconomic in the short term,” RBS chief Stephen Hester said Friday.
Hester took over as chief executive in October, replacing Fred Goodwin, who was asked to go by the government as part of its major bail-out package for ailing banks agreed in early October.
RBS, which also owns the NatWest bank, is among banks which have taken up a massive recapitalization offer made by the government in October.
The bank’s problems have also been linked to its ambitious 61-billion pound takeover of Dutch giant ABN Amro a year ago, and recent difficulties connected with the virtual collapse of inter-bank lending.
The British government took temporary control earlier this year of mortgage lenders Northern Rock and Bradford and Bingley.
It will also have a 40-percent stake in a new banking giant due to result from the merger of Halifax Bank of Scotland (HBOS) with Lloyds TSB.