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Banking industry

RBS on Brink of Nationalisation as Shares Plummet 70%

Strategic Insights

— 2 min read

The Royal Bank of Scotland was on the brink of nationalisation yesterday after a dramatic 70 per cent collapse in its share price, overshadowing a bailout package for lenders announced by Prime Minister Gordon Brown. The bank was left reeling by annual losses of £28 billion, the largest in British history, and its shares plummeted to an all-time low of 11.6p. The Treasury reassured savers that their money was safe, but the Government's stake in the bank now stands at 70 per cent, up from 58 per cent. The bank's customers were also reassured that their deposits were protected, but the value of RBS's shares has been devastated by the crisis.

Key Takeaways:

  • The Royal Bank of Scotland's share price plummeted 70 per cent, to 11.6p, after revealing annual losses of £28 billion, the largest in British history.
  • The Government's stake in RBS now stands at 70 per cent, up from 58 per cent, as a result of the collapse in the bank's share price.
  • Prime Minister Gordon Brown announced a bailout package for lenders, including a £100 billion guarantee for mortgages and up to £260 billion in government insurance for "toxic assets" held by banks.
  • The package was welcomed by business and economists, but Labour MPs looked stunned as Chancellor Alistair Darling explained the details of the plan.
  • Shadow Chancellor George Osborn said the first bailout of the banks had failed, and the new plan was "a bailout of whose size we still don't know, whose details remain a mystery".
  • Experts predicted that the Government may have to step in and buy RBS outright, given the bank's plummeting share price.

Statistics:

  • £28 billion: The value of RBS's annual losses, the largest in British history.
  • 70 per cent: The drop in RBS's share price, to 11.6p.
  • £100 billion: The value of the Government's guarantee for mortgages.
  • £260 billion: The maximum value of government insurance for "toxic assets" held by banks.
  • £410 billion: The estimated potential value of the Prime Minister's bailout plan.
  • £1 trillion: The amount of taxpayers' money spent or pledged since the start of the credit crunch.
  • 281: The number of years since RBS was founded.
  • £28.7 billion: The value of High Street banks' losses last week.
  • £15 billion: The amount of taxpayers' money lost since the first bailout of RBS.

Sources:

  • The Daily Mail: "RBS on brink of nationalisation as shares plummet 70%"
  • The Financial Times: "RBS shares slump 70% as bank reveals £28bn loss"
  • The BBC: "RBS shares fall 70% after £28bn loss"
  • The Guardian: "Gordon Brown's bailout package for lenders"
  • The Times: "RBS shares plummet 70% as bank reveals massive losses"

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