RBS chief stands down as Government injects 20bn

Royal Bank of Scotland chief executive Sir Fred Goodwin has resigned as the Government agrees to inject 20bn of new capital into the bank in an effort to stabilise the markets. A further 17bn of taxpayers cash will be injected into HBOS and Lloyds TSB.

Royal Bank of Scotland chief executive Sir Fred Goodwin has resigned today as the government agrees to inject £20bn of new capital into the bank in an effort to stabilise the markets. A further £17bn of taxpayers’ cash will be injected into HBOS and Lloyds TSB.

The Treasury insists that the government is “not a permanent investor in UK banks” and that it will dispose of investments “in an orderly way” in the future. As a condition of the deal, senior directors will get no cash bonuses this year, with future bonuses paid in the form of shares.

The plans mean taxpayers will own about 60% of RBS and around 40% of the merged Lloyds TSB and HBOS.

Lloyds TSB has also confirmed that its takeover of HBOS, owner of Halifax and Bank of Scotland, will be at a far lower price than had previously been expected. Under the revised terms HBOS shareholders will receive 0.6 Lloyds TSB shares for every HBOS share – down from an original level of 0.8

Meanwhile, Barclays has announced plans to raise £6.5bn without government help. It will issue a cash call to the market and will not pay a £2bn dividend to its shareholders. If successful, it will make Barclays the only major British-owned high street bank to be fully independent. The foreign-owned HSBC has also forgone the Government’s rescue package.

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