Latest Credit Victim RBS Seeks $24B

UK's 2nd-largest bank faces severe cash shortfall
By Jason Farago,  Newser Staff
Posted Apr 18, 2008 9:34 AM CDT
Latest Credit Victim RBS Seeks $24B
The Royal Bank of Scotland is issuing new stock in order to shore up its balance sheet.   (Getty Images)

Royal Bank of Scotland is preparing to issue new stock after conceding it was facing serious cash flow problems. After consulting with the Treasury and the nation's financial oversight authority, Britain's second-largest bank is planning a rights issue for around $24 billion to rebuild its capital reserves. The move may trigger a wave of other appeals for help, writes the Telegraph.

Shares in RBS rose 4% on the announcement but have started to yo-yo. In any event, the rights issue might not be enough to save the job of CEO Fred Goodwin, one of Britain's most respected financiers who has been forced to go begging for cash. Many investors believe that the troubles at RBS stem from having overpayed for ABN Amro, the Dutch bank that it bought after a dramatic battle with Barclays. (Read more Royal Bank of Scotland stories.)

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