Royal Bank of Scotland is considering a multi-billion-pounds rights issue that could spark a wave of similar moves by other banks, several British newspapers reported today.
The Daily Telegraphcited unnamed City sources as saying Britain's second-biggest bank was in the advanced stages of planning a rights issue that analysts believe will be for at least £5 billion (€6.23 bilion).
The Financial Timescited people familiar with the matter as saying a rights issue was one of a number of options being considered by Royal Bank of Scotland (RBS).
RBS said it noted speculation about a "possible rights issue," but said only that "RBS confirms that its Interim Management Statement covering trading performance and capital will be made next week." The statement is due on Wednesday.
A rights issue would represent an about-turn from RBS, which has previously insisted it did not need to raise more capital, and could put pressure on Chief Executive Fred Goodwin to go.
The Daily Telegraphsaid the move was believed to have been prompted by further subprime provisions on top of the £2.4 billion (€2.99 billion) already reported and government pressure for banks to strengthen their balance sheets in return for an offer of much-needed liquidity.
Goldman Sachs and Merrill Lynch are arranging the RBS rights issue, the newspaper said.
RBS's balance sheet has been stretched by its leading role in the €71 billion takeover and break-up of Dutch bank ABN Amro.