RBS MAY RAISE £1O-BN CAPITAL
Lender plans rights offering as part of bail-out plan for UK banking industry
Royal Bank of Scotland Group, the UK’s fourth biggest bank, plans to raise at least £10 billion (Bt590.99 billion) from investors and the government as the credit crisis worsens, a source said.
The bank may arrange a rights offering underwritten by the UK government as part of the rescue plan for the banking industry announced last week, the source said. RBS has not ruled out the government’s offer to buy preference shares, the source said.
RBS would be the first UK bank to use the government’s offer to spend as much as £50 billion buying stakes in the country’s banks to help them raise capital.
RBS needs to absorb more credit write-downs and meet the government’s criteria to be eligible for insurance on its short and medium term loans as part of Britain’s plan to help unlock capital markets.
“It is not an unrealistic possibility that RBS will need to raise about £10 billion,” Collins Stewart analyst Alex Potter said.
“It is difficult to know whether it is enough. They have raised very little in their disposal programme and things have since got worse,” he said. RBS spokeswoman Linda Harper did not comment.
RBS had planned to raise about £4 billion from asset disposals in addition to the £12.3 billion it raised in a rights offer earlier this year.
The bank abandoned plant to sell the Australian and New- Zealand investment-banking units of ABN Amro in August after failing to find a buyer, and struggled to sell its UK insurance unit for about £7 billion.
RBS, which has written down £5.9 billion of assets this year, slumped 62 percent in London last week amid concern about capital and further write-downs.
BLOOMBERG
London
