The Royal bBank of Scotland said recently that the British government will purchase a majority stake in the bank, buying 57.9% of the shares. RBS said that is could possibly post its first annual loss. Under the terms of the plan, the government agreed to purchase any shares in which investors did not buy. The plan will be costing the government about £20 billion, £15 of it going into ordinary shares and £5 going to preferred shares.
This particular bank bailout is the largest part of a bigger plan the British government has planned to recapitalize banks. Some of the other banks receiving aid are Lloyds TSB and HBOS. RBS will be buying back the preferred shares as soon as it can.
RBS has been hit hard due to sub-prime loans and its purchase of ABN Amro bank.
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