Key Royal Bank of Scotland joint ventures in Asia and the US could be scuppered if the take-up on a £15bn share offer comes up short and the government is forced to step into the breach to take a majority stake in the beleaguered bank, the shareholder prospectus revealed yesterday.

Key Royal Bank of Scotland joint ventures in Asia and the US could be scuppered if the take-up on a £15bn share offer comes up short and the government is forced to step into the breach to take a majority stake in the beleaguered bank, the shareholder prospectus revealed yesterday.

In the same document, Edinburgh-based Royal Bank noted that Stephen Hester, its recently appointed chief executive, had been awarded a £1.2m salary as well as a pile of shares worth around £6.7m.

Nonetheless, page 22 of the prospectus contains the critical clause, which notes that "change of control provisions may be triggered if HM Treasury acquires control of the group, which may lead to adverse consequences for the group".

While a spokesman for Royal Bank described the warning as a "standard legal clause that lawyers put in because they have to prepare for every eventuality", there remains a real possibility that the terms of the clause will be invoked.

The prospectus also notes that "change of control" could result in "the loss of contractual rights and benefits, as well as the termination of joint venture agreements".

As part of the banking bailout, the government has agreed to underwrite Royal Bank's ordinary-shares offer at a fixed price of 65.5p per share However, the level of the offer take-up, which is not expected to be known until the first week in December, depends upon the value of Royal Bank's shares over the next few weeks.

The shares have fluctuated wildly since it announced this latest round of capital raising on October 13, and if the price falls below 65.5p per share, the government may be forced to stump up the cash and could end up owning as much as 58% of the bank.

Royal Bank shares yesterday closed up 5.8%, or 3.75p, at 69p.

As part of the bailout, the government has also subscribed for £5bn of preference shares in Royal Bank.

Meanwhile, the prospectus states explicitly: "RBS and its subsidiaries are parties to joint ventures, alliances and other agreements containing change of control provisions that will be triggered if HM Treasury acquires control of the group and the counterparty rights under such provisions are not waived."

The statement pertains specificially to Royal Bank joint ventures with Bank of China, which target the consumer credit arena and wealthy Chinese individuals with private banking services, as well as Sempra Commodities, its joint venture with San Diego-based Fortune 500 energy services company Sempra Energy.

Royal Bank paid $1.35bn for its 51% stake in the joint venture earlier this year.

The prospectus states: "Agreements with change of control provisions typically provide for, or permit the termination of the agreement upon the occurrence of a change of control of one of the parties.

"The acquisition by HM Treasury of control of the group will likely trigger the need for filings with and approval from regulators, and there may be risks associated with applicable restrictions imposed by such regulators and any delays associated with obtaining required approvals."

The spokesman yesterday confirmed that the contracts for Royal Bank's joint ventures contain "these standard change of control provisions".

He added: "What happens depends on the share price over the next few weeks. But even if the government ends up with 58% they have made it clear they would remain at arm's length, and my understanding is that they would certainly not prompt any changes with joint venture partners.

"However, it is possible that a partner, such as the Bank of China, may want to have a discussion. It is also possible they may want to waive the provisions. Bank of China recently made it known they were very happy with RBS as a partner."

The spokesman also reiterated earlier comments from Hester that the future focus of Royal Bank will be on traditional banking, and that joint ventures - "no different from other parts" of the operation - would eventually have to "make their case for their contribition to the business".

Earlier this year, Royal Bank sold off its stake in its personal finance joint venture to partner Tesco, as part of efforts to restore its balance sheet, battered by the £50bn acquisition of ABN Amro, hefty write-downs and the global credit crunch.

Royal Bank had also intended to launch further joint ventures with Bank of China before the world's finances went pear-shaped.

Separately, Royal Bank yesterday announced plans to sell a two-part bond backed by the government guarantee, denominated in euros and sterling. Royal Bank will be the third UK bank to make use of the new government guarantee, following deals from Barclays last month.