Investors approve RBS' £19.7 billion capital raising plan

99.28% of the votes, representing 9.8 billion shares, were cast in favour of increasing the bank's authorised ordinary share capital and allotting ordinary shares for open offer.

To bolster its capital ratios, the bank will offer 22.9 billion new shares at 65.5 pence per share, totalling £15 billion, which will be underwritten by the Treasury. Additionally, the bank announced a government underwritten share placing of £5 billion, which, together with the newly-issued shares, is expected to raise total proceeds of £19.7 billion.

Yesterday's general meeting also saw shareholder approval of the waiver of Rule 9 of the City Code granted by the Panel on Takeovers and Mergers. This waiver was supported by 99.36% of the votes cast, or 9.8 billion shares, meaning the Treasury is not obliged to make a mandatory offer for the company.

RBS has had a turbulent year, suffering a drop of 87% in its stock price from 366.77p on January 2 to 46p at close yesterday. In this environment the bank has been very "grateful for the Government's intervention", said bank chairman Tom McKillop.

The board conceded yesterday that the government's recapitalisation plan "was essential to the Group's ability to do business". Failure to raise capital through the placing and open offer schemes and the issue of the preference shares, would leave RBS "unable to access additional funds or find alternative methods of increasing its core tier 1 and tier 1 capital ratios", the bank noted on November 4.

RBS' attributes its problems this year and its need for government help to two primary factors. Firstly, McKillop noted: "the group's historic use of an efficient balance sheet meant that we entered the period of significant market dislocation with a capital base that was, with hindsight, low relative to the size of our balance sheet".

The second factor McKillop mentioned was the acquisition of ABN Amro, which the chairman noted yesterday "increased our exposure to those wholesale markets within which many of the problems have emerged during the course of this financial crisis".

As a result of a troubled year from RBS and its investors, McKillop apologised to share holders. "I, as the chairman of RBS Group, both personally and in the office I hold, am profoundly sorry about the position we have reached", he said.

Under the terms of yesterday's proposals. RBS will not pay dividends on its ordinary shares until the preference shares issued to the Treasury are no longer in issue, or unless otherwise agreed by Treasury. The bank noted that "it is accordingly our intention to repurchase these preference shares as soon as it is prudent and practicable to do so".

Additionally RBS' chief executive, Sir Fred Goodwin, stepped down from the board yesterday. He has been replaced by Stephen Hester.

See also: UK government unveils £50 billion bank recapitalisation plan

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