RBS considers plan to raise cash
Britain’s second largest bank, Royal Bank of Scotland, has confirmed it is considering asking shareholders for extra cash to shore up its finances.
The bank said it was considering a rights issue and a further announcement would be made in due course.
The bank’s board is widely expected to unveil the plan on Tuesday in what could be the biggest rights issue in UK corporate history.
RBS executives could ask shareholders for up to £12bn of extra cash.
Like many banks worldwide, RBS wants to improve its financial position amid the global credit crunch.
The rights issue is being seen as a necessary measure to provide a capital cushion for the amount of risk on its balance sheet after RBS played a leading role in last year’s takeover of the Dutch bank ABN Amro.
The Sunday Telegraph said at the weekend that RBS is also considering selling its insurance firms Direct Line and Churchill.
The businesses could raise up to £5bn for RBS.
RBS will issue a trading update on Tuesday, ahead of its annual meeting on Wednesday.
The statement is expected to reveal writedowns of about £5bn as a result of the bank’s exposure to the credit markets.
Original source : BBC News
