RBS confirms rights issue is taken up by holders of 95% of shares

| June 9, 2008 | 0 Comments
”RBS

Royal Bank of Scotland (RBS) has confirmed that it has received acceptances for 95.11% of shares, therefore allaying fears for investors and underwriters.

Investment banks Goldman Sachs, Merrill Lynch and UBS will have to sell 300 million shares, worth over £600 million on the market today.

The cash call was at 200p and shareholders who did not take up their rights will receive a cheque for the difference between that and the price at which the underwriters managed to place the shares today.

The rights issue is required by RBS to fund its role in the £56 billion takeover of Dutch bank ABN Amro and to shore up its balance sheet after £6 billion of sub-prime-related losses.

Furthermore, RBS is hoping to raise £7 billion through the sale of its insurance business, which includes Churchill and Direct Line but according to analysts, RBS may be forced to accept a price nearer to £5 billion since a number of key bidders have already dropped out the auction.

Since the rights issue was announced April, shares in RBS have fallen 25%. However, sentiment towards the bank has improved over the last week, with many analysts upgrading their recommendation on the bank.

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