Objective of shareholder wealth maximisation

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Following the financial crisis, many governments 'bailed out' their country's banks by buying bank shares. For example, in November 2008, the UK Government spent £45bn buying a 58% stake in RBS ordinary shares alongside a tranche of preference shares. In April 2009 the preference shares were converted into ordinary shares and the Government's ordinary shareholding in RBS now stands at 65%. Including the Governments acquisition of B shares in December 2009, the total economic ownership of RBS group by the UK Government currently stands at 81%. (RBS, 2013)

Based on your understanding of agency problems outlined in your pre-reading, how would you characterise the current ownership structure of RBS? Is the current ownership structure consistent with the objective of shareholder wealth maximisation?

Reference no: EM133080695

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