Bank wrongs and rights issues
The Royal Bank of Scotland is not alone in trying to avoid a further dilution of its non-government shareholding.
It's already well past the 50% ownership point that Eric Daniels at Lloyds Banking Group is trying to avoid.
The state currently owns 70% of RBS, so an increase to 84% to fund the Asset Protection Scheme (if you include non-voting B shares) is hardly a huge change in the nature of RBS's relationship with Alistair Darling and the Treasury.
But the option of a rights issue, being sounded out with investors recently, and floated in the media at the weekend, also fits with the strategy of getting more private capital into the bank to impress the European Commission.
That private injection is one of the competition commissioner' priorities, and the Royal Bank and Treasury are keen to show willing to Neelie Kroes while she spends the next few weeks considering the recently-delivered UK proposal for more state aid in the form of the Asset Protection Scheme.
But look what's happening elsewhere, and you can see bankers running from the clutches of government. Goldman Sachs is reported to be considering abandonment of its commercial banking licence in order to avoid the intrusion of the US government into its bonus-setting policies.
In Spain, Santander is considering a rights issue. Swedbank has already gone for one. And in Italy and Austria, the prospect of government strings being attached to a capital injection for UniCredit, Italy's biggest bank with a major presence on the Austrian side of the Alps, has it also looking to a rights issue.
That suggests two things. One, that the tension of being in part-government ownership is proving increasingly irksome to bankers - not least when their bonuses are in the political cross-hairs.
And they seem to think there are billions of pounds and euros available for rights issues. At Lloyds, there is also thinking about testing the market waters with securitised loans - yes, that's the same type of products that got banks into so much trouble.
No wonder RBS shareholders feel queasy at the reminder of Sir Fred with last year's £12bn record rights issue that disappeared down a black hole only four months later.
But as the crisis anniversaries are marked this autumn, it's interesting to notice these strong hints of investor confidence slowly seeping back into the bank sector.
Hullo, I'm Douglas Fraser, and I'm business and economy editor at ´óÏó´«Ã½ Scotland. Welcome to my blog, where you can read my take on money matters, viewed from a Scottish perspective.
Comment number 1.
At 23rd Sep 2009, nine2ninetysix wrote:Interesting that ultimate power lies with Neelie Kroes.
When we voted, or more likely didn’t, in the European elections I’m not sure that we had any real idea that Neelie would have so much impact in our lives or need so much help to do it.
Her own web page lists a team of 25, including 2 drivers who look after her. That is on top of the 800 officials in the competition directorate making 826 who will influence what the Royal Bank and HM government can and can’t do.
One thing is certain; the taxpayer will pick up the tab regardless.
What ever happened to keeping things simple?
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Comment number 2.
At 23rd Sep 2009, U14125311 wrote:RBS is a dead duck, a worthless brand.
I remain astonished that HM Government hasn't hived off NatWest - which still has a cachet, esp. in English markets - in preparation for an 80s-style privatisation as and when the recovery is truly back on track, as well as seeking a new corporate identity (for the company if not the Scottish bank).
And who are these RBS bosses trying to block HMG? Any other company whose employees acted AGAINST the interests of a majority shareholder would see those individuals be collecting their P45s in short order.
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