The Royal Bank of Scotland is considering a multi-billion-pound share issue, according to weekend reports. RBS, 70 per cent owned by the state, may raise money in the equity market to avoid handing more control over to the Government. Under its participation in the Government's asset protection scheme (APS), the bank will hand over a further £19.5bn of securities as a fee, pushing up the Government's stake to 84.5 per cent. The Sunday Times said CEO Stephen Hester had already sounded out investors on a fundraising. Bloomberg said the sum raised would be £3-5bn. The news follows reports Lloyds Banking Group is also looking at ways to avoid participation in the APS.
The Sunday Times broke the story before it was picked up by the major news websites. RBS declined to comment on the story. UKFI, the government entity holding banking shares, also refused to be drawn.
Who are the PR players?
RBS handed its retained financial comms account to Finsbury in March, taking it from FD. Andrew McLaughlin is the bank's group director of communications.
What happens next?
A lot of water has gone under the bridge since its £12bn rights issue last summer. Take-up of that offer was strong, but it failed to attract investor interest in a £5.4bn rights issue earlier this year. If RBS goes ahead with this latest share offering a tepid response would be a PR disaster. The initiative is also just one source of capital for the bank, which may be forced to sell businesses by the EU as a result of receiving state aid.
439% - Rise in RBS' share price since January 2009.