RBS prepares for shareholders revolt today as Osborne prepares to offload taxpayers 79% stake

Royal Bank of Scotland Group plc (LON:RBS) is one of the largest financial institutions in the world, and has been the subject of high profile organizational and structural changes, gargantuan fiscal penalties and metaphorical finger-pointing ever since its near-collapse in October 2008 under the leadership of Fred Goodwin.

At that time, Mr. Goodwin’s strategy of aggressive expansion primarily through acquisition, including the takeover of ABN AMRO, eventually proved disastrous and led to the near-collapse of RBS in the October 2008 liquidity crisis.

The €71 billion (£55 billion) ABN AMRO deal, of which RBS’s share was £10 billion in particular stretched the bank’s capital position, £16.8 billion of RBS’s record £24.1 billion loss is attributed to writedowns relating to the takeover of ABN AMRO.

This, combined with the credit crunch that affected many British banks after a prolonged period of time during which lenders in the prime and sub-prime sector allowed mortgages to be issued with very high loan-to-value ratios to individuals with little ability to repay, created a situation in which a bank run was followed by the British government having acquired an 81% shareholding in the bank.

Today, RBS is expected to face a revolt by its shareholders as a result of proposals that would involve the bank paying the government’s bill for selling shares.

Chancellor of the Exchequer George Osborne has voiced his proponency toward the government selling the remaining 79% stake that the British taxpayer holds in the bank, however RBS has been asked to pay some of the costs associated with the transaction, a proposal which shareholders will vote on today.

The bank’s annual general meeting which is held in Edinburgh, Scotland, often attracts protesters as a result of the litany of regulatory fines and civil law suits which have cost the bank several million pounds recently as a result of LIBOR and FX benchmark manipulation, as well as various operational matters including the system failure last week which created payment difficulties for thousands of customers.

As part of the British government’s acquisition of the majority of RBS, the group was required by a European Commission ruling to sell a portion of its business, as the commission regarded the shareholding as state aid.

Photograph courtesy of the Daily Mail, depicts protesters at RBS headquarters

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