Writedowns won't stop bank's share sale - ResearchInChina
Date:2008-04-21
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ROYAL Bank of Scotland Group Plc will announce writedowns of between 5 billion pounds (US$10 billion) and 7 billion pounds this week as it prepares a share sale, the Sunday Times said, citing unidentified officials.
The UK's second-biggest lender, whose board was due to meet yesterday, also plans to announce a stock offering of between 10 billion and 12 billion pounds, and is looking to raise as much as 5 billion pounds by the end of this financial year, the newspaper said.
Led by Chief Executive Officer Fred Goodwin, Edinburgh-based Royal Bank of Scotland is the most indebted of the biggest UK banks after paying about 72 billion euros with Banco Santander SA and Fortis for ABN Amro Holding NV, mostly in cash.
"It probably is worse than what people are expecting," Sandy Chen, a London-based analyst at Panmure Gordon, said, referring to the potential credit-related losses at RBS. Chen has a "sell" recommendation on the stock.
RBS is considering a share sale to shore up capital, according to a person with knowledge of the plan.
The bank needs to meet capital-adequacy requirements after about 2.6 billion pounds of markdowns, the person said last Friday, declining to be identified as no decision had been made.
"We will fully update the market on both trading and capital," Carolyn McAdam, a spokeswoman for RBS, told Bloomberg News yesterday. She declined to comment further.
RBS has a so-called equity Tier 1 capital ratio of about 4.5 percent, trailing Barclays Plc, the one-time rival suitor for ABN Amro, at about 5.1 percent.
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