Monday 18 June 2018

Shareholders to grill RBS over dividends, branch closures and re-privatisation

Analysts expect RBS dividends to kick off at 6p per share.

Ross McEwan is chief executive of RBS (John Stillwell/PA)
Ross McEwan is chief executive of RBS (John Stillwell/PA)

By Kalyeena Makortoff and Ravender Sembhy, Press Association City Staff

Royal Bank of Scotland executives are expected to face a barrage of questions from shareholders over dividends, branch closures and re-privatisation at the lender’s annual meeting next week.

The bank, 72% owned by the taxpayer, is likely to be quizzed over plans to kickstart dividend payments after recently agreeing a 4.9 billion US dollar (£3.6 billion) settlement with US regulators.

The deal, which related to claims RBS mis-sold toxic mortgage bonds in the run-up to the financial crisis, paves the way for the resumption of payouts, ending a barren decade for investors.

Chief executive Ross McEwan said earlier in May that the bank would have conversations with the regulator “in the next month or so” over relaunching shareholder payouts, which equity analysts at Jefferies expect could start at 6p per share.

That figure could grow to 16p by 2020, the broker predicts.

The US settlement also removes a major hurdle to the bank’s return to private hands, with the Government signalling that it is ready to start selling shares in the lender.

The Government hopes to sell £15 billion worth of shares by 2023, around two-thirds of its stake.

However, it is facing a near-£26.2 billion loss on its holding, with the lender’s shares languishing well below the average 502p share price paid during the 2008 and 2009 bailout, at around 292p.

The bank is also likely to be grilled at the May 30 AGM in Edinburgh over plans to shut 162 branches in England and Wales following a review of its network.

The lender said earlier this month that it was targeting sites that were in close proximity to other branches, as it starts to reintegrate its Williams & Glyn network back into the core bank.

Last year, RBS avoided the compulsory sale of Williams & Glyn, which had been ordered by regulators as part of state aid rules following its £45 billion Government bailout at the height of the financial crisis.

Instead, RBS will fund a near-£800 million pot to spur competition, £350 million of which will help challenger banks convince small firms to switch accounts from the state-backed lender.

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RBS deal

Investors are expected to probe RBS executives about its alleged mistreatment of small business at the hand of its now defunct turnaround unit, Global Restructuring Group (GRG).

The Treasury Select Committee earlier this year released data showing that 30 staff currently working for the RBS restructuring division previously worked in the heavily criticised GRG.

Nicky Morgan, chairwoman of the cross-party group of MPs, said the discovery suggested the overhauled turnaround division at the bank may have been a mere “rebranding exercise”.

RBS has been dogged by allegations that GRG intentionally pushed firms towards failure in the hope of picking up their assets on the cheap.

But the lender has said that the culture, structure and operations at RBS have “fundamentally” changed.

Press Association

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