Royal Bank of Scotland seeks $24 billion from investors

Big writedowns hitting Englands 2nd bank

biggest bank fundraising announced to date
april 22, 2008 nakedcapitalism.com
Today, we had the biggest bank fundraising announced to date, RBS's hugely dilutive £12 billion equity sale (and that's in addition to £4 billion of asset sales). Reader Steve pointed us to a key item from the press release: the Scottish bank's writedowns are markedly deeper than those taken by US banks to date, suggesting that the worst is not over on this side of the Atlantic. They have marked their US Alt-As at 50% of face, subprime at 38%, and CMBS at 83%.

Royal Bank of Scotland seeks $24 billion from investors
From Reuters By David Jolly Tuesday, April 22, 2008
PARIS: Royal Bank of Scotland on Tuesday became the latest lender to seek new financing to cover billions of pounds worth of soured investments, a move that could open the way for other British lenders with bad loans on their books to follow suit.

RBS said it would sell £12 billion, or $24 billion, of new shares to its current shareholders as it sought to restore its capital base, which it said had been depleted by the write-down of £5.9 billion of assets.

British banks have trailed some of their peers in the United States and Europe in writing down bad loans. British accounting standards do not require banks to act as early as their U.S. counterparts to recognize bad debts

Also from: Reuters By Daisy Ku and Laurence Fletcher
RBS's credit ratings came under pressure, with Fitch Ratings cutting one notch to AA and Moody's Investors Service warning it could strip the bank of its Aaa rating. Standard & Poor's said it maintained a negative outlook on the bank. (Additional reporting by Richard Barley; Editing by Erica Billingham)