Friday, April 18, 2008

Royal Bank of Scotland asks shareholders for £12billion to shore up its finances as 2,300 jobs go in City crunch

• Citigroup announces first quarter losses of $2.5bn and writes off $3bn of bad investments

Britain's second biggest bank is expected to ask shareholders for billions of extra cash in a bid to repair its balance sheet, it was reported today.
The Royal Bank of Scotland is mulling a rights issue that could raise as much as £12 billion.

This morning the bank's shares and those of their rivals were fluctuating and RBS traded down 0.6 per cent at 364p late this morning, reversing an earlier rise of as much as 4.9 percent and giving it a market value of 36.5 billion pounds.
Experts feared that the embattled banking sector could suffer on the stock market as a result of the speculation.
The bank, which has lost almost half its market value in the past year, has sold assets such as its European consumer-finance unit and a stake in Southern Water Capital Ltd.

RBS is Britain's second biggest bank but needs to repair its balance sheet
The bank's move comes as it was revealed yesterday that up to 2,300 City of London jobs will be axed because of the credit crunch with Citigroup, which has its British headquarters at Canary Wharf, expected to reveal 1,000 redundancies today.
The rumours were given strength this morning when Citigroup, the world's biggest bank, announced first quarter losses of $2.5billion.
The bank has also written off $3billion of bad investments due to the US sub-prime mortgage crisis.
RBS' decision - which could be followed by other major lenders - is needed because the bank has had to writedown the value of its sub-prime debts.
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NWN: Hold onto your hats ! We would advise keeping some spare cash around too. Only the other day, the Bradford & Bingley were seriously considering this option. Many others will now follow suit.

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