RBS £12bn fund raising put to the vote

Sir Fred Goodwin will today ask shareholders in Royal Bank of Scotland to support the biggest rights issue in corporate history.

The chief executive of the Edinburgh-based bank will be joined by members of the board at an emergency meeting called to ratify a £12bn cash call on investors.

The rights issue is intended to bolster the bank's regulatory capital ratios and has put pressure on rivals such as Barclays to do more to build the capital cushions designed to protect customers from the possible collapse of a bank.

The RBS fund raising follows the record breaking takeover of Dutch bank ABN Amro last year which left the bank with thin capital ratios at a time when international banking regulators were looking for fatter capital bases.

The ground breaking move has allowed HBOS to ask its shareholders to support a £4bn funding raising and left Barclays, which is due to update the City on first quarter trading tomorrow, facing questions about its capital strength.

It also comes as Barclays, which had originally agreed to take over ABN Amro, prepares to poach up to 40 key bankers from the RBS-owned ABN Amro. Five key officials have already been hired as managing directors and it is thought their teams are preparing to make the jump to Barclays Capital, the investment banking arm of Barclays, in what would be one of the biggest poaching.....continued below

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exercises ever witnessed in the City.

The RBS rights issue would be launched in June, provided shareholders support the cash call today. It has left Goodwin and the RBS chairman Sir Tom McKillop facing questions about their leadership of the bank after what is regarded as change in strategy.

The bank has always operated on thinner capital ratios than any of its rivals but is now setting the bar at a core Tier 1 capital ratio - closely watched by regulators - at 6%. HBOS intends to match this but Barclays' target is 5.25% - something analysts are convinced is going to have to change and will force Barclays to find up to £5bn of fresh capital.

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