RBS mulls share split in bid to cut volatility

City A.M. Reporter
ROYAL Bank of Scotland wants to slash the number of shares it has in issue to reduce price volatility and enable a more consistent valuation of the bank.

RBS, which is 82 per cent taxpayer-owned after being rescued in 2008, plans to give shareholders one new ordinary share for every 10 shares they currently hold.

“The company currently has a very large number of issued ordinary shares and at the current level small absolute movements in the share price result in large percentage movements resulting in considerable volatility,” RBS said in a letter to shareholders yesterday.

It said a “sub-division and consolidation” of shares would result in a share price more appropriate for a company of RBS’s size, which could cut volatility and enable “a more consistent valuation of the company”.

Shares in RBS closed at 23.3p, below their nominal value of 25p. Its market capitalisation is £13.7bn, down 60 per cent over the last two years.