Royal Bank of Scotland (RBS) is set to seek shareholder approval to purchase shares from the government in a step to reduce public ownership in the company.
The British lender will convene a general meeting on 6 February 2019 to take the shareholder approval.
RBS share buyback plan
According to The Guardian, RBS is planning to buy a stake of up to 4.99% from the government. Currently, the government owns 62.3% stake in the company.
In 2008, RBS became a majority state-owned lender following a state bailout of £45bn during the financial crisis.
The government is planning to shed its entire stake in the lender by 2023-2024. However, the process is estimated to cause a £28.5bn exchequer loss due to the fall in RBS share prices in the last decade.
Commenting on the share buyback plan, RBS chairman Howard Davies was quoted by the publication as saying: “This resolution would provide the bank with the flexibility to use some of its excess capital to buy back government shares at a time and price agreed with HM Treasury.
“The board believes that this is in the best interests of the bank and its shareholders by helping to facilitate the return of the company to full private ownership.”
In June last year, the UK government divested 7.7% stake in RBS for £2.51bn as part of its strategy to return the bank to private ownership.
The government sold 925 million shares at 271 pence each, incurring a loss of £2.1bn.