RBS looks to shareholders for £12bn of new capital

Apr 23 2008 by Iain Laing, The Journal

A look back at the run up to the bank's problems:

The Royal Bank of Scotland yesterday announced it would raise £12bn through a rights issue. Here is a timeline of events leading up to the move.

February 2006: RBS announces biggest ever annual profits haul by a UK bank of £7.9bn.

March 19 2007: Barclays announces exclusive talks with Dutch bank ABN AMRO over an £80bn merger. A month later RBS announces it is teaming up with Belgian bank Fortis and Spain-based Santander to launch a bid for ABN.

May 29: The RBS-led consortium unveils a proposed offer for ABN worth £48.2bn, trumping the earlier move from Barclays.

August 14: Bank of England Governor Mervyn King is first alerted to potential problems with Northern Rock, and starts a support operation for the lender.

September 13: Details of the Northern Rock bail out emerge, leading to a run on the bank and creating further turmoil in the financial markets.

October 8: RBS-led consortium clinches victory in the battle for the Dutch giant, agreeing to pay around £49bn. RBS picks up a portion of ABN’s North American and European business as well as the bank’s Asian operations and its wholesale business, excluding Brazil.

February 28 2008: RBS unveils a £2.5bn credit crunch write-off for 2007 with profits rising 9% to £10.2bn. Chief executive Sir Fred Goodwin says the bank’s capital position remained within target ranges and also lifted its annual dividend 10%. He tells investors the group is entering 2008 with ``real momentum".

March 14: US investment bank Bear Stearns sends more shockwaves through the financial markets after requiring US Federal Reserve support.

April 18: Reports appear that RBS will seek a right issue worth between £10bn and £12bn.

April 22: RBS asks shareholders for £12bn of extra capital, also unveiling a £5.9bn credit crunch-linked write down for this year. The bank increases its capital ratio targets, saying "the most appropriate way of reaching them more quickly was through a rights issue".