Royal Bank of Scotland Group PLC intends to call for an extraordinary general meeting to obtain investors' support for a potential share buyback, which would reduce the U.K. government's stake in the lender, The Sunday Times reported Sept. 2.
The Edinburgh-based bank could announce the meeting in early 2019, after the Bank of England's stress test in November. An announcement could potentially be made in February 2019, together with the bank's full-year 2018 results, Shore Capital banking analyst Gary Greenwood told the newspaper.
The bank could reportedly buy back shares only from the government and it would have to go alongside a placement by UK Government Investments, which controls the state's 62.4% stake in RBS, the report said. While UKGI is barred from voting, RBS is expected to win the support of other shareholders as it would be a step toward the bank's reprivatization, the report noted. If approved, the buyback would run for 12 months before needing shareholder approval again.
The share sale would determine the price, with RBS expected to purchase at the same level, the report noted, adding that the buyback would be limited to 4.99% per year, according to the report.
This development follows Britain's sale of a 7.7% stake in RBS announced in June. In August, the bank said it intends to pay its first dividend in almost 10 years despite reporting a year-over-year decline in its first-half results.
Meanwhile, CEO Ross McEwan told BBC News that the bank could lose some of its business clients in the event of a no-deal Brexit.
Although Prime Minister Theresa May expressed confidence in securing a deal for Britain, McEwan told BBC Scotland that the bank is "planning for the worst." RBS has already sent a team of 150 staff to Amsterdam to establish a new operation for the bank's customers in Europe and is awaiting final approval for appropriate licenses, McEwan said.
McEwan noted that if the bank does not obtain the licenses in the next two months, RBS will have to think about which European customers it may not be able to bank.
In August 2017, RBS had identified the Dutch capital to be its EU base after the U.K. exits the bloc, saying then that it was in advanced discussions with the central bank of the Netherlands.