Bosses of the UK’s second biggest bank today faced tough questions from shareholders a day after they asked for an unprecedented £12bn (€14.9bjn) cash injection.
Royal Bank of Scotland chiefs were accused by one shareholder at their annual general meeting in Edinburgh of “bad management”, while others expressed concern about the pay deals they received.
But no calls were made for board members – or chief executive Sir Fred Goodwin - to resign.
The meeting came a day after Sir Fred launched Europe’s biggest rights issue to help the group shore up its finances.
Two months ago he declared RBS’s financial position satisfactory, and yesterday the bank unveiled a further £5.9bn (€7.3bn) of investment write-downs from risky US property-related assets.
The rights issue will see 11 new shares released for every 18 existing shares at a price of 200p per share.
RBS’s closing share price at the start of the week was 372.5p.
Today, private shareholder Brian Peart voiced fears that the plans would drive down the value of existing shareholdings.
“It’s unbelievably bad management to have gone down this road,” he told the meeting.
He suggested a figure of 340p per share would be more appropriate and said shareholders would “dilute” their personal holding if they chose not to take up the new offer.
He said: “Why not a rights issue of £3.40? It’s a figure I think should be about right.
Bank chairman Sir Tom McKillop reassured him that shareholders would have the opportunity to sell their rights if they chose not to take up the offer.
But Mr Peart, who is also chair of the UK Shareholders Association in the North East, countered: “If they sell their rights they’re obviously going to dilute their holding, which people might have had for years and years and years with the Royal Bank of Scotland.”
Shareholder John Steen told the meeting he would like the board to reconsider its entire remuneration policy, saying they were paid salaries “above anything the rest of us can only dream of”.
In March it was revealed that Sir Fred Goodwin saw his pay package rise 5% to £4.2m (€5.2m) in 2007, despite billions in losses from the credit crunch.
To applause, Mr Steen told the meeting: “You guys are paid as though you were superhuman and it’s very clear that you’re not.”