Cosmetic adjustment sees consolodated share price up more than 900% on Friday's closing price
Shares in Royal Bank of Scotland have begun trading today following a consolidation agreed at the banks annual general meeting last week.
Shareholders will be given one new ordinary share for every 10 shares they currently own under the agreed scheme, which RBS said will help to reduce “volatility” in its share price.
RBS shares closed at just under 20 pence last Friday for the Jubilee weekend, and began trading today at around 200 pence when the markets opened.
The share price then rose by nearly eight per cent in early trading, despite the bank making no significant announcements and continued uncertainty in the European markets.
Based on the new consolidated stock price, shares in RBS will now have to climb above 500 pence per share for the Government to break even on its 83 per cent stake in the bank.
The largely cosmetic consolidation, in real terms, would mean the banks shares worth 600 pence at pre-bailout price would have to be worth ten times that value after today's consolidation for the same shareholder to break even.
Today's new share trading price is around the same price RBS shares were trading at before it was rescued in a taxpayer backed bailout, though achieved in a diluted10 to one share swap.
RBS chairman, Sir Philip Hampton said the consolidation would reduce volatility and help to improve shareholder confidence.
Shareholders with 10 or less shares have largely been wiped out in the move, and will be offered the chance to reclaim their cash entitlement, which is likely to be less than £2.
RBS said it will donate money not claimed by small shareholders to charity.
Following the consolidation, RBS has reduced its share register of around 60 billion shares in circulation to around six billion.