Investors have shunned an RBS rights issue for the second time this year, leaving the taxpayer to pick up the slack. The troubled bank announced this week that existing shareholders took up just 0.24 per cent of the new shares on offer, leaving the Treasury to stump up around £15bn to take a 57.9 per cent majority stake. Shares had been trading below the offer price of 65.5p leaving little incentive for private investors to get involved. Due to this discount the taxpayer has made a paper loss of £2.3bn.
- The reaction?
While not entirely unexpected, the events were described in The Independent as a 'sobering moment' for British banking. The news was widely covered in the national and international press, most of which focused on the instant £2.3bn loss to the taxpayer. A Treasury spokesman said the stake 'supports financial stability' and protects customers while 'safeguarding the interests of the taxpayer'.
- Who are the PR players?
The bank's internal team, led by Andrew McLaughlin, chief economist and group director of comms, handles PR activity. It is understood the bank had been recruiting for a specialist head of comms for investment banking, but this position was taken off the market in recent weeks.
- What happens next?
The Government said its stake in RBS will be managed at 'arm's length'. But changes will be inevitable under state control. Unlike Northern Rock, RBS will still have a significant base of private shareholders and media speculation already suggests that the interests of the two may dramatically conflict. Its PR operations will also doubtless change focus as the general public effectively own a majority share in the bank.
85% Amount the value of RBS has fallen in one year.