RBS chief faces shareholders

The boss of the UK’s second biggest bank will come face to face with shareholders today just a day after asking them for an unprecedented £12bn (€14.9bn) cash injection.

Royal Bank of Scotland chief executive Fred Goodwin could come under fire from investors at the group’s annual general meeting in Edinburgh.

Yesterday he unveiled details of a £12bn rights issue to help shore up the bank’s finances, as well a further £5.9bn (€7.36bn) of credit crunch investment write-downs.

The cash injection – which will be the biggest of its kind seen in Europe - comes less than two months after Sir Fred pronounced the bank’s capital satisfactory.

He said yesterday it was needed because “the world had changed” in the past two months.

The 49-year-old boss – who earned £4.2m (€5.2m) last year including a £2.9m (€3.6m) bonus – has dismissed talk of his resignation over the issue, saying he was “100% focused” on moving the bank forward.

Today’s meeting will not vote on the rights issue, instead covering other matters such as the approval of the group accounts, the directors’ remuneration and the re-election of various board members.

But shareholders – several hundred of whom are expected to turn up – will have a chance to quiz management.

RBS’s rights issue will be finalised over the coming months and see a small investor with 1,800 shares have to fork out £2,200 (€2,744) to maintain their shareholding. Chairman Sir Tom McKillop said yesterday he expected the move to be “pretty well-supported”.

It forms part of a major refinancing for Britain’s second biggest banking group, which last year led the £49-billion acquisition of Dutch bank ABN Amro. RBS has also announced the possible sale of its profitable insurance arm, which includes Churchill Insurance and Direct Line.

In February this year, RBS unveiled £2.5bn (€3.1bn) of credit-crunch losses for 2007, but hiked profits during the year 9%, to more than £10bn (€12.4bn).