So, who owns the UK’s biggest bank? Well, it can’t be long now before the answer to that is you and me – the British taxpayer.
The RBS rights issue flopped this morning, and it seems that the British government now owns 57.9 per cent of the bank.
Just 0.24 per cent of the rights issue was taken up, not surprising really, considering the share price in the bank this morning was lower than the rights issue price.
Stephen Hester, RBS chief executive, said: “We regret that existing shareholders did not take up their pre-emptive rights but understand that market sentiment toward the banking sector made this uneconomic in the short term. We must put the past behind us and move forward with a clear focus on what we need to do next.”
As for us taxpayers, it appears we are already £2.3bn down on the deal, for that is the difference in value between our RBS shares at their current price and the price we paid.
Mind you, this could yet turn out to be a good investment move. Presumably the credit crunch will end one day, and when it does bank shares will surely rise – and we coud all make a tidy profit.
On the other hand, Keynes once said: “Markets will remain irrational for longer than you remain solvent.”
If the UK stays solvent, then, when rationality returns, the British taxpayer/bank shareholder may enjoy a windfall – let’s hope it isn’t a big if.
© Investment & Business News 2013