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Shareholder Activists Wanted to Take on RBS

February 29, 2012

On Thursday 23rd Feb, the day on which RBS announced its preliminary
result of a £2.0bn loss [attributable to ordinary and B shareholders] for 2011, I attended a meeting in which grave
doubts were expressed about the governance of RBS and whether the figure
of £2.0bn was a true picture or whether the actual position is much worse
(e.g. assets still overvalued). I hope to see some coverage of this event
in the media or on youtube in due course. You might wish to note that
there are some very angry existing RBS shareholders who took up a rights
issue in 2008 on the basis of an allegedly dodgy prospectus. “Those who
put that forward knowing the accumulating failing debts should be
punished. Including the accountants and lawyers. The bank was clearly not
a going concern for 12 months, nor prudent or giving a true and fair view of its accounts.” Gavin Palmer.

A guy called Gavin Palmer was there. He is an experienced shareholder
activist, cutting his teeth on ‘fatcat’ Cedric Brown, CEO of British Gas
in 1995. Now he is after a better governance model for British companies,
starting with RBS. The idea is to bring shareholders into the selection of
new members for the board. Almost invariably, the only candidates elected
to the board of a company are those nominated by the existing board. The
nomination committee therefore has great power. In British and American
companies at present the nomination committee is a sub committee of the
board, and often chaired by the board’s chairman. In Sweden it is made up
of the larger shareholders and is a servant of the AGM – see the attached
document ‘Tomorrow’s Corporate Governance’.

Gavin claims – see the document ‘ Benefit_Share_Non_Com_Institution’
attached – that the introduction in Britain of something like the Swedish
model would bring benefits to a wide variety of stakeholders:
institutional investors, pension funds, private investors, boards of
directors, chairmen of boards, and politicians. These benefits would
include longer term thinking and a more balanced attitude to risk.
Politicians would benefit from this being an investor and industry led
solution. As the proposed nomination committee would only have 5 members,
the government’s 83% holding in RBS would entitle it to only one place, as the largest shareholder and another as the largest lender, and hence there would be independent voices which would include a representative from private shareholders via a recognised association.
To put a suitable special resolution on the agenda of RBS’ AGM Gavin needs
100 people with 2000 RBS shares each to sign the resolution. If you have
them fine. Otherwise if you are feeling very public spirited it would cost
you around £560 at 28p per share. I am not sure of the position of people
with shares in nominees names. Of course the 100 shareholders would not in
themselves win the necessary 75% vote, but the government would have to
think twice before rejecting it without putting forward an alternative
measure for improving governance.
Of course this measure would not cure all the problems of the banking
system, such as its tendency to destabilise the economy simply by creating
too much money in the ‘good times’ and not enough in the bad times, and the ‘moral hazard’ created by bailouts and deposit guarantees, but it is an initiative well worth supporting.
Contact Gavin on or 07811225524.

One Comment
  1. Gavin Palmer permalink

    Join up if you can or know someone. Private Shareholders have numbers in our favour and we vote at elections.

    Make a difference and email me to take part.

    To our mutual success

    Gavin Palmer

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