Royal Bank of Scotland (RBS) today revealed that the value of its assets has fallen by £6.1 billion this year as it “regretfully” laid out plans to raise £19.7 billion to prop up its balance sheet.
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RBS hopes to raise £15 billion through offering new ordinary shares to investors at 65.5p each, above today’s share price, which fell slightly to 64.8p.The offer is fully underwritten by the Government so, if investors choose not to buy stock, the Treasury will buy the shares, using taxpayers’ funds.
The lender, which raised £12 billion through a rights issue only four months ago, also said today that it will issue £5 billion in preference shares to the Government, which will buy the stock using taxpayers’ money.
Preference shares mean the Government must be repaid before the bank may pay dividends to shareholders.
RBS revealed this morning that it had written down the value of its assets by a further £206 million in the third quarter, adding to the £5.9 billion it declared in the first six months of 2008. The potential third-quarter writedown of £1.2 billion was reduced to £206 million by an accounting change.