RBS asks investors for £12bn

The Royal Bank of Scotland today asked shareholders to pump in £12bn (€15bn) of new capital as it unveiled another £5.9bn (€7.3bn) of credit crunch write downs.

Britain’s second biggest banking group said it would raise the sum by issuing shares at a 43.6% discount to yesterday’s closing price.

The group also said it was carrying out a “strategic review” of its insurance arm, which could potentially involve the sale of its profitable Churchill Insurance and Direct Line businesses.

The moves come as the group seeks to improve its capital base following last year’s near £50bn (€62bn) acquisition of Dutch Bank ABN Amro, and billions of pounds of investment write-downs.

RBS chairman Tom McKillop said: “This is a difficult time for the financial services industry, and it has presented us with specific challenges.

“Central to these has been the question of our capital ratios, which have been the focus of much attention, both internal and external, over recent months.”

In today's trading statement, which comes a day before the bank's annual general meeting in Edinburgh, RBS also gave its backing to embattled chief executive Fred Goodwin.

He is now under pressure after insisting earlier this year that the bank would not need a rights issue to bolster its capital position.

RBS said: “The board of RBS has full confidence that the executive team will be able to lead RBS through the current challenging conditions, deliver the transaction benefits relating to the acquisition of ABN AMRO, and realise the substantial value in RBS’s UK and international franchises.”

But chairman Sir Tom revealed he was recruiting three extra non-executive directors “with experience appropriate to the enlarged group’s operations”.

Last year the group took a £2.5bn (€3.1bn) hit from the credit crunch. But the bank also hiked profits for the year to £10bn (€12.4bn).