The Royal Bank of Scotland Group plc , Edinburgh , UK
The Royal Bank of Scotland Group Plc
is a majority part-nationalised banking and insurance holding company in which HM Treasury holds a near 58% shareholding. The group is based in Edinburgh, UK.
It includes The Royal Bank of Scotland Plc founded in 1727 by a Royal Charter of King George I, National Westminster Bank Plc in Great Britain and Ulster Bank Limited in Ireland.
RBS Group is the largest banking group in Scotland, and at its peak was the second largest in the UK and Europe (fifth in stock market value), and the fifth largest in the world by market capitalisation. According to Forbes Global 2000, it was the tenth largest company in the world. Its shares have a primary listing on the London Stock Exchange. The registered head office of the group and the UK clearing bank are located at St Andrew Square. In 2005, Queen Elizabeth II opened the bank's new head office building in Gogarburn, Edinburgh.
The RBS Group operates a wide variety of banking brands offering personal and business banking, private banking, insurance and corporate finance throughout its operations located in Europe, North America and Asia. In the UK and Republic of Ireland, the main subsidiary companies are: The Royal Bank of Scotland; National Westminster Bank; Ulster Bank; Drummonds and Coutts & Co. In the United States, it owns Citizens Financial Group, the 8th largest bank in the country. It is the second largest shareholder in the Bank of China, the world's fifth largest bank by market capitalization in February 2008.
On 13 October 2008, it was announced that the British Government may take a stake of up to 58% in the Group, a move aimed at recapitalising the bank. The aim is to "make available new tier 1 capital to UK banks and building societies to strengthen their resources permitting them to restructure their finances, while maintaining their support for the real economy, through the recapitalisation scheme which has been made available to eligible institutions".
History
Takeover Bids
During the late 1970s and early 1980s the Royal Bank was the subject of three separate takeover approaches. In 1979, Lloyds Bank, which had previously built up a 16.4% stake in the Royal Bank, made a takeover approach for the remaining shares it did not own. The offer was rejected by the board of management on the basis it was detrimental to the bank's operations. However when the Standard Chartered Bank, proposed a merger with the Royal Bank in 1980, the board of management responded favourably to the offer. Standard Chartered Bank was headquartered in London, although most of its operations were in the Far East, and the Royal Bank saw advantages in creating a truly international banking group. Approval was received from the Bank of England, and the two banks agreed a merger plan that would see the Standard Chartered acquire the Royal Bank and keep the UK operationbased in Edinburgh.The Bank did obtain an international partnership with Banco Santander Central Hispano of Spain, each bank taking a 5% stake in the other. However this arrangement ended in 2005, when Banco Santander Central Hispano acquired UK bank, Abbey National – and both banks sold their respective shareholdings.
International Expansion
The first international office of the bank was opened in New York in 1960. Subsequent international banks were opened in Chicago, Los Angeles, Houston and Hong Kong. In 1988 the bank acquired Citizens Financial Group, a bank based in Rhode Island, United States. Since then, Citizens has acquired several other American banks, and in 2004 acquired Charter One Bank to become the 8th largest bank in the United States.
The Royal Bank also opened offices in Europe and now has subsidiaries in: Austria, Switzerland, France, Italy, Germany, Greece, Spain, Portugal, Denmark, Norway, Sweden and Federation of Bosnia and Herzegovina In the Asia-Pacific region, the bank has offices in: Australia, China, Hong Kong, Japan and Singapore.
2008 financial crisis
After previous denials following press coverage,[12] on the 22 April 2008 RBS announced a rights issue which aimed to raise £12billion in new capital to offset a writedown of £5.9billion resulting from the bad investments and to shore up its reserves following the purchase of ABN-Amro. This is the largest rights issue in British corporate history.The bank also plans to divest some of its subsidiaries to raise further funds, notably its insurance divisions Direct Line and Churchill.
Despite this fundraising and amid the worsening of the 2008 Global Financial Crisis, on the 13 October 2008, British Prime Minister Gordon Brown announced a UK Government bailout of the financial system.
The Treasury would infuse £37 billion ($64 billion, €47 billion) of new capital into Royal Bank of Scotland Group Plc, Lloyds TSB and HBOS Plc, to avert financial sector collapse. He stressed, however, that it was not "standard public ownership" and that the banks would return to private investors "at the right time."Alistair Darling stated UK taxpayers would benefit from the government's rescue plan, as it will have some control over RBS in exchange for £5 billion in preference shares and underwriting the issuance of a further £15 billion in ordinary shares. If shareholder take-up of the share issue was 0% then total government ownership in RBS would be 58% and if shareholder take-up was 100% then total government ownership in RBS would be 0%. In the event, less than 56 million new shares were taken up by investors, or 0.24pc of the total offered by RBS in October 2008.
Recent developments
In late October 2008 it was reported that the insurance company Swiss Re and venture-capital firm CVC Capital Partners were to purchase the insurance division for a reported £6 billion which would reduce some of the funds needed from the Treasury.
