View more on these topics

Royal Bank of Scotland launches £12bn rights issue

Royal Bank of Scotland Group has confirmed today it will be launching a £12bn rights issue in a bid to reposition its capital ratios and strengthen its capital base.

The bank admits that it has taken this action in light of the developments during March including the “severe and increasing deterioration in credit market conditions.”

It says there is an increased likelihood that credit markets could remain “difficult for some time”.

The rights issue is part of the group’s plan to implement revised targets for its capital ratios.

The revised targets are for RBS to maintain a tier 1 capital ratio of between 7.5 per cent and 8.5 per cent and a core tier 1 capital ratio in excess of 6 per cent.

The rights issue of £12bn are forecasted to result in a tier 1 capital ratio in excess of 8 per cent and a core tier 1 capital ratio in excess of 6 per cent at 31 December 2008.

RBS has also stated that while preparing the underlying capital forecasts, it has been assumed there will be write-downs additional to those reported in 2007. It says that the assumed effect on core tier 1 capital is £4.3bn net of tax and £4bn net of tax in estimated disposal gains.

Chairman Sir Tom McKillop admits this is a “difficult time” for the financial services industry, presenting RBS 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.

“It was the Board’s declared intention to rebuild our Tier 1 capital to the
middle to upper end of our historic range of 7 per cent to 8 per cent over a three year period, but in light of the current market environment, this level and timing are considered no longer appropriate.

McKillop says that in discussions with shareholders it was clear that many of them had reached a similar conclusion, hence today’s announcement of a rights issue.

“Naturally, shareholders wish to understand what we have assumed in relation to
the prospects for further write-downs and disposals of non-core assets, and
today’s announcement seeks to clarify the basis of our capital planning.”


Farquhar wants volatility sector

London & Capital head of UK retail distribution Jamie Farquhar believes the Investment Management Association should introduce a volatility-based sector to allow multi-managers greater investment flexibility.

Majority decisions

Iwas chatting to a good friend of mine who happens to be a long-standing IFA. Over the last 20 years or so, he has built up a business looking after the finances of many high-earning professionals and entrepreneurs.

A fair share for all

New defined-benefit transfer value regulations have eventually been set out following a lengthy consultation process. These replace the current calculation method, known as GN11.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm