The UK Individual Shareholders Society (ShareSoc) and the UK Shareholders’ Association said it is “a public disgrace” that individual investors were excluded from the placing by UK Government Investments of RBS shares at 271p.

ShareSoc director Cliff Weight and UK Shareholders’ Association policy director Peter Parry said in a letter to London’s Financial Times newspaper: “It should be easy to reserve a proportion for those smaller shareholders wishing to participate in the placing.

“The RBS share price was trading in the 290p to 295p range before the leak of the impending sale, which conveniently manipulated the share price down, resulting in a group of institutional shareholders being able to buy 925 million shares at a discount of 20p to the previous price, ie £180m.

“On this occasion small shareholders could have bought in the market on the day the placing was announced at 266p, so have not lost out by being excluded from the placing.

“Nevertheless, it is difficult to justify a non-public placing.

“The real reason open offers are not included is that the institutions taking up the placing do not like them and want exclusive access to cheap shares and it is less work for the corporate broker — money for old rope.”