RBS set to finalise its record cash call
THE Royal Bank of Scotland could announce details of its planned record £10billion to £12billion rights issue as early as tomorrow.
The bank’s board and City advisers are expected to finalise plans for the fund-raising today after a series of meetings during the weekend.
Chief executive Sir Fred Goodwin is set to announce the biggest cash-call on shareholders in British corporate history before RBS’s annual meeting on Wednesday.
As well as a rights issue of about £11billion to shore up the company’s balance sheet, he is also expected to unveil writedowns of between £5billion and £7billion from exposure to the US sub-prime mortgage market. RBS has already reported writedowns of £2.4billion.
“Investors want certainty and quick action and that is what a rights issue will bring,” said one analyst.
RBS is also looking at possible sell-offs, on top of the £3billion sale of Angel Trains and its Australian corporate finance business.
Attention in the City is focused on its Direct Line and Churchill insurance operations which could fetch more than £5billion.
These are seen by some analysts as no longer core to the company’s main banking business.
Among potential buyers are Axa of France, AIG of the US and Allianz of Germany.