Britain’s RBS bank unveils record write-downs and cash plans

April 22nd, 2008 - 3:23 pm ICT by admin  

DPA
London, April 22 (DPA) The Royal Bank of Scotland (RBS) Tuesday asked shareholders for a record 12 billion pounds ($24 billion) of new capital as it revealed fresh write-downs of 5.9 billion pounds resulting from the current credit crunch. Britain’s second biggest banking group said it would raise the capital by issuing shares at a 43.6-percent discount to Monday’s closing price in what analysts said was one of the biggest rights issues in British corporate history.

The losses announced as a result of exposure to the US subprime mortgage market are the highest yet recorded by any British bank, and come on top of write-downs of 2.4 billion pounds already announced by RBS.

The Edinburgh-based bank said it was also carrying out a “strategic review” of its insurance arm, which could potentially involve a sale yielding some four billion pounds.

RBS is the first lending British bank to ask shareholders to help rebuild its capital base, but others are expected to follow suit.

It spent nearly 50 billion pounds last year on the acquisition of Dutch Bank ABN Amro in one of the biggest takeovers in the banking sector.

Details of the RBS plans to raise more cash come ahead of a shareholder meeting Wednesday, and follow the injection of a massive 50 billion pounds into the banking system by the Bank of England Monday.
DPA

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