RBS trading briefly halted as shares tumble

8th Dec 2009 11:42

Royal Bank of Scotland (RBS) shares dropped below 30p today, almost matching last week's lows of 29.62p, and temporarily went into auction for 5 minutes at about 11:36am today, to stem the decline.The auction process is used when a company's share price falls, or rises too quickly in a short space of time. It smoothes out these falls and rises and make trading more orderly.It kicked in after selling pressure caused the share price to drop quickly from 31.59p to 29.89p, down almost 10% on the day. RBS shares had traded above 35p late last week.Rumours are flying around City trading floors at quite a pace. Some say a bank tax could accompany tomorrow's pre-Budget statement, while others worry about its exposure to Dubai.There's also talk of a mass board resignation over last week's story about a possible cap on bonuses at the bank's money-spinning investment arm.And today, Treasury documents reveal nearly £170m of Royal Bank's toxic assets insured by the British taxpayer exist outside the UK.RBS, which will soon be 84%-owned by the state, is sticking assets worth £282bn into the government's Asset Protection Scheme (APS).Much of the overseas assets, about £75bn, have stemmed from its disastrous acquisition of Dutch bank ABN Amro.Last week, it was reported that RBS directors were prepared to resign if the Treasury interfered with the £1.5bn bonus pot available to staff at the bank's investment arm. News that chancellor Alistair Darling is ready to veto the huge payout prompted the bank's lawyers to suggest a mass departure at board level. They think tinkering with bonuses by the government, which currently has a 70% stake in RBS, could threaten the bank's ability to remain competitive. Indications are that Darling won't accept a bonus pool much in excess of last year's £1bn, but RBS is expected to make £6bn from investment banking this year, implying an increase of 50% in bonuses.