RBS share price: Lender cancels £8 billion taxpayer support scheme

on Dec 17, 2013
Updated: Oct 21, 2019

iNVEZZ.com, Tuesday, December 17: Royal Bank of Scotland Group Plc (LON:RBS) has moved a step closer to reprivatisation with the cancellation of its £8 billion taxpayer support scheme a year ahead of schedule. RBS’ share price has been little changed in morning trading in London today, edging 0.05 percent lower to 320.45p.

**RBS cancels £8 billion option**
The 81 percent taxpayer-owned lender said in a statement yesterday that it had agreed with the Treasury to cancel a £8 billion capital facility, under the terms of which Treasury was committed to buying £8 billion worth of new B shares if the bank’s core Tier 1 capital ratio fell below five percent.
The Treasury put up the contingent capital facility (CCF) in 2009 as an additional buffer against losses on top of the £45 billion bailout. Although RBS has never used the facility, it has had to service a four percent annual facility fee.

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With the CCF due to expire at the end of next year, the early cancellation saves RBS the £320 million which the bank would have had to pay as the facility fee in 2014.
In its statement, the bailed-out bank said: “The cancellation of the CCF is another important milestone in the bank’s recovery from the 2008 financial crisis. It is further evidence of the progress made in making RBS safer and stronger, with dramatically improve liquidity and capital positions.”

**Closer to privatisation**

Cancellation of the Treasury standby facility is seen as moving RBS closer to a reprivatisation and comes just over a year after the lender quit the Asset Protection Scheme (APS), set up in 2009 to provide insurance for the toxic assets of RBS and Lloyds Banking Group (LON:LLOY).

RBS has also been in talks with Treasury over a termination of the Dividend Access Share (DAS), which prevents the bank from paying dividends to anyone other than the Crown until the share price hits a pre-agreed level.
In November, RBS said that it would create an internal ‘bad bank’ for its riskiest assets in an endeavour to offload its remaining toxic assets and speed up its privatisation. (RBS share price falls on internal ‘bad bank’ plan and Q3 loss)

Chancellor George Osborne has however signalled that an RBS divestment is unlikely before the 2015 election. In any event, the current share price of around 320p remains well below the Crown’s break-even price of about 500p.
**As of 08:27 UTC, buy RBS shares at 320.30p.**
**As of 08:27 UTC, sell RBS shares at 320.10p.**
Trade stocks with Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.


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