Belfast Telegraph

RBS shareholders seek an oversight role at the top bank

By Ben Woods

Around 160 investors are demanding Ulster Bank owner Royal Bank of Scotland (RBS) shores up corporate governance by creating a shareholder committee. The aim is to sniff out "poor stewardship" and avoid a rerun of the bank's near collapse in 2008.

The move would prevent RBS from repeating the chain of events that triggered the lender's crash during the financial crisis, according to investor groups ShareSoc and the UK Shareholders' Association (UKSA).

Mark Northway, chairman of ShareSoc, said shareholders deserved a new approach that gave more effective input.

"One objective is to stop the events that took place at RBS from ever happening again," Mr Northway said.

"A dominant CEO, concealing the true financial position of the company from investors, proceeding with a reckless acquisition, and then publishing a rights prospectus which concealed the problems faced by the company. These are not examples of good governance."

In April 2008 RBS asked existing shareholders to inject £12bn into the firm to strengthen its reserves after the bank had splurged £49bn to acquire Dutch bank ABN Amro.

The deal proved toxic and, just months later, the value of RBS shares plunged 90% and the Government had to step in with a £45bn bailout. RBS remains 73% owned by the UK taxpayer.

UKSA chairman John Hunter said there was a need for companies to step up and make capitalism work for everyone.

It comes after reports said the RBS remuneration committee was discussing plans to cut the maximum amount chief executive Ross McEwan can earn under his long-term incentive plan from £3m to £1.75m.

Business Secretary Greg Clark announced a new package of corporate governance reforms which could require firms to make public the ratio between the pay of bosses and workers, and provide seats for staff on company boards.

RBS must decide whether the proposal meets the requirements to face a vote at its AGM.

Belfast Telegraph