Government buys 57.9% of RBS

The Government will own a majority in Royal Bank of Scotland after existing shareholders bought only at tiny proportion of the new issue. The Government will pay about £15bn for its stake in the bank, and will also buy £5bn of preference shares.

The small take-up by existing shareholders was as expected because the shares were offered at 10p more than their current trading value. Shareholder bought just 0.24 per cent of the new shares, making the bank a paper loss of £5.6m.

RBS shareholders voted at a meeting last week to take the Government money, though the bank will lose freedom in areas such as executive pay and dividend policy.

Yesterday, new figures from Nationwide, the UK's biggest building society, showed that house prices had continued to fall in November, but that the slump became less severe, with a fall of only 0.4 per cent.