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RBS boss apologises over losses RBS boss apologises over losses
(about 20 hours later)
Royal Bank of Scotland (RBS) chairman, Sir Tom McKillop, has said he is "profoundly sorry" for the bank's financial difficulties.Royal Bank of Scotland (RBS) chairman, Sir Tom McKillop, has said he is "profoundly sorry" for the bank's financial difficulties.
Shareholders have voted by 99% in favour of accepting a £20bn ($29.9bn) government bail-out.Shareholders have voted by 99% in favour of accepting a £20bn ($29.9bn) government bail-out.
Sir Tom said he was "sorry" about the financial and human cost that the bank's troubles have caused.Sir Tom said he was "sorry" about the financial and human cost that the bank's troubles have caused.
Earlier this month, RBS said it expected to report its first full-year loss in its almost 300-year history.Earlier this month, RBS said it expected to report its first full-year loss in its almost 300-year history.
Sir Tom told the meeting he was "sorry" about the financial and human cost that the bank's troubles have caused. Sir Tom told the meeting that he was "sorry" about the financial and human cost that the bank's troubles have caused.
The chairman said the current crisis was the most difficult experience "in over 40 years of my working life".The chairman said the current crisis was the most difficult experience "in over 40 years of my working life".
He said the challenges the bank - and the banking sector - now faced were "unprecedented".He said the challenges the bank - and the banking sector - now faced were "unprecedented".
"I, as the chairman of RBS Group, both personally and in the office I hold, am profoundly sorry about the position we have reached," he said."I, as the chairman of RBS Group, both personally and in the office I hold, am profoundly sorry about the position we have reached," he said.
'Increased vulnerability''Increased vulnerability'
Sir Tom said that RBS's troubles were made worse by its acquisition of the giant Dutch bank ABN Amro, which RBS bought at the height of the boom.Sir Tom said that RBS's troubles were made worse by its acquisition of the giant Dutch bank ABN Amro, which RBS bought at the height of the boom.
A consortium led by RBS paid 71bn euros ($91bn; £61bn) for ABN Amro in October 2007.A consortium led by RBS paid 71bn euros ($91bn; £61bn) for ABN Amro in October 2007.
Critics say that the RBS's problems stem from the fact that it over-reached itself.Critics say that the RBS's problems stem from the fact that it over-reached itself.
Sir Tom said the purchase of ABN Amro "increased the short-term vulnerability" of the bank as the financial crisis intensified in September.Sir Tom said the purchase of ABN Amro "increased the short-term vulnerability" of the bank as the financial crisis intensified in September.
The chairman said that RBS found that it did not have the cash reserves necessary to cope with the worsening credit crunch.The chairman said that RBS found that it did not have the cash reserves necessary to cope with the worsening credit crunch.
"Had we known the severe market dislocation and economic deterioration we would face, we would have built up larger capital reserves earlier," he said."Had we known the severe market dislocation and economic deterioration we would face, we would have built up larger capital reserves earlier," he said.
The shareholders' vote means that the government could end up taking a stake of up to 60% in the troubled bank.The shareholders' vote means that the government could end up taking a stake of up to 60% in the troubled bank.
Under the terms of the £20bn capital raising, RBS plans to raise up to £15bn from investors by selling shares at 65.5 pence each. If the shares are not taken up, the government will acquire them.Under the terms of the £20bn capital raising, RBS plans to raise up to £15bn from investors by selling shares at 65.5 pence each. If the shares are not taken up, the government will acquire them.
The government will also directly buy preference shares in the bank - worth a total of £5bn.The government will also directly buy preference shares in the bank - worth a total of £5bn.
Sir Tom is retiring next year, and he is not the only one to leave the bank.Sir Tom is retiring next year, and he is not the only one to leave the bank.
Chief executive Sir Fred Goodwin has resigned, and is being replaced by Stephen Hester who is expected to begin the process of shedding up to 3,000 staff.Chief executive Sir Fred Goodwin has resigned, and is being replaced by Stephen Hester who is expected to begin the process of shedding up to 3,000 staff.
On Wednesday, Lloyds TSB shareholders voted overwhelmingly in favour of taking over HBOS as well as accepting government bail-out money.On Wednesday, Lloyds TSB shareholders voted overwhelmingly in favour of taking over HBOS as well as accepting government bail-out money.