RBS shareholders meet on bail-out plans

Plans to prop up part-nationalised Royal Bank of Scotland (RBS) will be put to a shareholder vote today.

Plans to prop up part-nationalised Royal Bank of Scotland (RBS) will be put to a shareholder vote today.

The meeting in Edinburgh comes a day after the latest bail-out proposals were approved by European competition officials in return for major sell-offs by the bank.

RBS is putting £282bn (€314.4bn) in bad debts into a British Treasury-backed insurance scheme, requiring the issue of new shares which must be approved by the meeting.

The British Treasury is pumping an extra £25.5bn (€28.4bn) into the bank under the proposals – with a further £8bn (€8.9bn) ready if needed – taking its stake to 84%.

The European Commission has demanded the sale of RBS’s Churchill and Direct Line insurance arm and parts of its investment banking business in return for the extensive state support.

European competition commissioner Neelie Kroes said the rescue of the ailing bank had been “one of the most complex the Commission had had to deal with during the financial crisis”.

The result of the meeting should be a formality due to the British government’s majority stake. The meeting will also vote on plans to adopt recommendations on pay – such as the clawback of bonuses – agreed by the G20 nations.

Under the restructuring plans, RBS is also selling 318 branches of the former Williams & Glyn’s outlets in England and Wales and its NatWest branches in Scotland.

These represent 14% of its UK network and will reduce its retail market share by 2%.

Its share of the small business banking market will fall by 5%.

But Ms Kroes also warned that further actions could be imposed on the bank if the company fails to follow through on the proposals quickly enough.

“In case RBS does not deliver on its balance sheet reduction targets by 2013, the Commission will be able to intervene again and more divestments will be required.”

RBS racked up a UK record loss of £24.1bn (€26.9bn) in 2008 after soaring bad debts and a huge write-down on its ill-fated acquisition of Dutch bank ABN Amro at the peak of the boom in 2007.

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