L sharesholders in Royal Bank of Scotland (RBS) voted overwhelmingly in favour of the bank joining a government-backed insurance scheme for bad debts yesterday.
Some 99 per cent of minority investors in RBS, now 84 per cent state-owned, supported the decision to join the asset-protection scheme at a meeting at the company’s Edinburgh headquarters.
The plan to insure £282bn of loans will shield RBS against losses, but will come with strings attached, including a government’s right to veto the “quantum and shape” of the bank’s bonus pool.
RBS Chairman Sir Philip Hampton warned that there were no alternative capital measures available to RBS, which lost a record £24.1 billion last year.
“Bluntly, without these measures RBS would be at risk of full nationalisation, and in that event independent shareholders could very well lose most or all of the value in their shares,” he said.
During the meeting attended by 98 investors, the bank sought to dampen speculation of a revolt at the top over the government’s bonus veto.
Many minority investors have been hit by massive losses to their savings as a result of RBS’s troubles. While supportive of the bank’s turnaround efforts few backed a resignation over bonus payments.
Retired civil servant Peter Thompson said: “If the board wants to resign, let them. There are plenty of unemployed bankers out there.
“They were paying the top money when the system crashed into a wall, so I don’t think this argument stands.”
RBS, one of the top overseas lenders to troubled Dubai, confirmed a “significant exposure” in the debt-laden emirate but said potential losses would not lead the bank off course.
Sir Philip could not give any indication of when dividends would return but said restoring the dividend today would be “absolutely impossible”.