Investors snub RBS £15bn rights issue
Taxpayers are set to become the majority owner of Royal Bank of Scotland after shareholders shunned its £15bn emergency cash call.
Shunned: RBS will become public property after the rights issue is ignored by investors
The government will end up with a 58% in the stricken lender after standing behind a rescue rights issue that flopped spectacularly yesterday.
The deadline for the capital raising passed with the RBS share price marooned far below the subscription level, giving investors no incentive to sign up for the deal.
The news came as another blow for taxpayers, who are footing the government's £37bn bank bailout plan.
The state is nursing a paper loss of £2.7bn after buying £15bn of RBS shares at 65p.
Even after rising 2.8p yesterday, the shares were languishing at 53.6p.
Taxpayers are also staring at a £1bn paper loss on the state-sponsored takeover of Halifax Bank of Scotland by Lloyds TSB.
The two banks are raising a combined £13bn through rights issues underwritten by the state.
But the government may end up owning less than the maximum 43.5% stake in the enlarged group, say experts.
HBOS (up 11p to 97p) and Lloyds TSB (13.3p higher at 160.9p) are trading much closer to the subscription level for new shares, suggesting that investors may be lured into buying new shares.
HBOS and RBS were forced to accept part-nationalisation after the turmoil on financial markets brought the two giants to the brink of bankruptcy.
Bank of England Governor Mervyn King yesterday warned that banks may need to raise even more cash to see them through the recession.
Banks in crisis
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Paragon stopped writing mortgages to new customers in February and its £10bn buy-to-let book is effectively being run off.
Pulling in its horns sparked a 40% plunge in full-year pretax profits to £53.7m. Paragon (down 1¼p to 41¾p) slashed its full-year dividend to 3p from 8p last year.
Boss Nigel Terrington must be ruing the decision to turn down a 125p a share takeover bid just two months ago.
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