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RBS seeking to buy back up to £1.4bn worth of bail-out shares from the UK government

In a statement released after the London markets close on Thursday, the FTSE 100-listed bank said it would seek shareholder approval to buy a stake of up to 4.99% from the Treasury
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The move would reduce the taxpayer’s holding in RBS to 60.3% from around 62.3% currently

Royal Bank of Scotland PLC (LON:RBS) has revealed that it is looking to buy up to £1.4bn worth of shares from the UK government as part of efforts to cut the publicly owned stake in the rescued lender.

In a statement released after the London markets close on Thursday, the FTSE 100-listed bank said it would seek shareholder approval to buy a stake of up to 4.99% from the Treasury at a general meeting in Edinburgh scheduled for February 6.

READ: RBS's dividend signals a return to strong dividend growth for banks but elsewhere profit warnings are a concern

The move would reduce the taxpayer’s holding in RBS – which received a £45bn government bail-out during the 2008 financial crisis – to 60.3% from around 62.3% currently.

The bank said the shares bought would be cancelled, resulting in a smaller percentage cut in the government’s total stake because there would be fewer shares in circulation.

The Treasury disposed of 7.7% of its holding in RBS for £2.5bn last year and has said it plans to sell its entire stake by 2023-2024.

RBS’s move follows months of speculation about how the bank will use its excess cash, having already spent £240mln on its first shareholder dividend in a decade last October.

Howard Davies, RBS’s chairman commented: “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.”

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