London, Oct 13 : Financial services major Royal Bankof Scotland (RBS) today said it will raise 20 billion pound by issuing shares to strengthen its capital base, amid deteriorating market condition.
The bank would raise 15 billion pound by issuing ordinary shares in open market at a price of 65.5 pence per share, RBS said in a regulatory filing to the London Stock Exchange.
It would raise another 5 billion pound by issuing preferential shares to the UK government, it added.
"The steps we have announced today, taken in conjunctionwith the government, will secure a stronger future for the RBS Group. We regret having to raise new capital but believe that decisive action is necessary in this unprecedented market environment," RBS Chairman Tom McKillop said.
Following the recapitalisation, RBS will be one of the best-capitalised banks in the world, enabling us to supportour customers, while pursuing our refocused strategic goals," McKillop added.
The filing, however, said Tom McKillop would retire as Chairman at RBS' Annual General Meeting in April 2009.
Further, Chief Executive of the bank Fred Goodwin would step down and be replaced by Stephen Hester, at present Chief Executive of British Land and a non-executive director of theGroup, RBS said.
The capital raising would increase RBS's pro-forma coretier I and II ratios by about three and four percentage points respectively, on a proportionally consolidated basis.
And would significantly enhance the Group's financial flexibility in the face of continuing turbulence and uncertainty in the financial markets.
At the time of the launch of the offer, RBS shareholders would be invited to subscribe to all or part of their entitlements, while any new shares not taken up by them would be placed with HM Treasury at a fixed price of 65.5 pence pershare.
New institutional investors may also be permitted tosubscribe for new shares under the offer, the filing added.
The offer, which is expected to close in November, is subject to shareholder's approval, the bank added.
On the subject of dividend, RBS announced that, "No dividend will be paid on ordinary shares until the preference shares have been repaid."
Another board member Johnny Cameron, who is the Chairmanof the Global Markets would step down from the Board withimmediate effect, it added.
Besides, the Treasury would work with the board on itsappointment of up to three new independent Non-ExecutiveDirectors, RBS said.
On October 8, 2008, the UK government had announced arange of measures, which should ease both the cause and the symptoms of the current difficulties, which include the provision of liquidity and funding support and facilities toenable banks to raise new capital to strengthen their capital base.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment