Chairman Sir Philip Hampton says investors have no hope of recouping their losses any time soon
The chairman of Royal Bank of Scotland has admitted it could take generations for the bailed-out bank to return to its pre-crisis value. Shareholders, he said, had no hope of recouping their losses any time soon.
RBS has undergone a drastic restructuring since being saved from collapse by the government more than three years ago. The shares were worth more than 600p at their peak in March 2007, but have since slumped to 20p, closing down 3% on Wednesday.
Security was tight at the state-owned bank’s annual meeting at its Gogarburn headquarters just outside Edinburgh, keeping out anti-poverty protesters and environmental campaigners opposed to RBS’s funding of the oil and gas industry, including controversial tar sands projects in Canada.
RBS insists that aside from its £15bn lending to oil and gas companies last year, it was the largest funder of renewable energy projects in the UK, in particular wind power.
Shareholders were not impressed with the bank’s overall performance. “I’ve lost thousands of pounds,” said one private shareholder. “I’m not a very happy customer, let alone shareholder.”
Sir Philip Hampton, RBS chairman, admitted that the loss suffered by RBS investors was “one of the biggest shareholders have ever experienced”.
He added: “I don’t think shareholders’ wealth is likely to be restored any time in my lifetime or some lifetimes beyond. Many thousands of shareholders lost an awful lot of money … we’ve still got a lot of baggage to clear up, which will be difficult.”
With UK Financial Investments, which manages the 83% taxpayer stake in RBS, backing all the resolutions, voting was a formality. The remuneration report and the proposed share consolidation were both passed with more than 99% of investors in favour.
Several private shareholders expressed concern about the share price makeover, which will see every 10 shares swapped for one share worth 10 times as much. This will push the stock price to about 200p when the consolidation happens next Wednesday.
The share swap will not change the bank’s overall value, but the board hopes that reducing the number of shares will lessen volatility in the share price.
Despite low attendance – 180 shareholders against 300 last year – the meeting was lively, with several investors questioning the bank’s “blunders,” executive pay and alleged mis-selling of interest rate swaps to small firms.One private shareholder awarded Stephen Hester, the RBS chief executive, “some brownie points” for giving up his all-share bonus worth nearly £1m earlier this year following a public outcry. However, the investor went on to demand that two ordinary shareholders be added to the bank’s remuneration committee, and put himself forward, free of charge. Hampton said he always welcomed offers of free labour, but added that the committee was “fully manned”.
Hampton also launched a robust defence of his management team. “When you are in the thick of a turnaround plan as vast as this one in these very challenging times, it is sometimes difficult to appreciate just how much progress we are making,” he said.