RBS chief sorry as 99% of shareholders back rescue

21 November 2008 / by Rebecca Sargent
RBS chairman, Sir Tom McKillop has finally apologised for the losses caused to the bank's shareholders and staff as a result of its weakened financial position.

Sir Tom made the announcement at the banks Extraordinary General Meeting (EGM) yesterday, where RBS shareholders made their decision to back the banks' second cry for help this year.

RBS intends to borrow £20billion through the Government's recapitalisation scheme, which could mean that the Government owns a stake of 60 per cent in the bank.

Speaking yesterday, Sir Tom said: "I, as the Chairman of RBS Group, both personally and in the office I hold, am profoundly sorry about the position we have reached.

"I am sorry about the very financial and therefore human cost that those who have invested in us now feel and recognise how seriously this has impacted shareholder confidence in RBS.

"And I am also sorry if any of our customers have suffered anxiety as a result of the situation."

Sir Tom added that he will be retiring as chairman at the 2009 AGM and Sir Fred Goodwin stepped down as chief executive yesterday. Stephen Hester now takes over as RBS chief executive and faces a struggle to refocus RBS and lead it back to the "world class status and financial returns that we can all be proud of."

Mr Hester's new strategy is thought to involve the removal of up to 3,000 staff members.

According to Sir Tom, RBS's position reached critical in October as its share price has suffered, "more than most other UK banks" over the year.

RBS made its first call for help this summer with a rights issue that raised £12billion through new shares. The acquisition of ABN AMRO has been viewed by some as the root of RBS's problems, but in his speech yesterday,

Sir Tom defended the move saying, "The acquisition of ABN AMRO may now be seen with hindsight as having increased our exposure to the emerging crisis, but it did not cause it.

"We would have needed to strengthen our capital position in any event as is also evident from the capital raisings being undertaken by the majority of our UK competitors and other banks around the world."

The news follows the approval by Lloyds TSB shareholders of the proposed HBOS acquisition.

HBOS also raised cash earlier this year, through a £4billion rights issue, but similarly to RBS, it was not enough to save the banking group from further rescue action.

© Fair Investment Company Ltd