The British government acquired 58 percent stake in Royal Bank of Scotland (RBS) after investors shunned a rescue plan. The second largest bank of Britain, RBS had suffered losses of 692 million pounds for the first half of this year. The credit crunch had badly affected the financial health of the bank. Talking to media, RBS chief Stephen Hester said that it is very unfortunate that the existing shareholders of bank failed to raise cash. Stephen Hester became the chief executive in October after replacing Fred Goodwin.

 

The acquisition of RBS stake marks the latest attempt by European countries and the US to rescue the ailing banks from global credit crisis. In a statement to the media, the bank claimed that the investors took just 0.2 percent of the shares and the remaining 22.8 billion shares are acquired by the British government. Reports also claim that the government is also planning to buy 5 billion pounds of preference shares from RBS. Apart from these, Britain will also take big stakes in merger partners Lloyds TSB and HBOS under a 37 billion pound bailout plan announced last month.

 

Meanwhile, the government has appointed John Crompton from Merrill Lynch in UK Financial Investments, the company set up by the government to manage its banking stakes. John Crompton who is an experienced equity capital markets banker will devise and execute a strategy for the sale of the holdings. However, according to analyst, the government will hold the stakes for several years as sales are not expected until markets recover.