ROYAL Bank of Scotland is expected to announce tomorrow that almost 95% of shareholders have signed up to its £12bn rights issue.
By the deadline of 11am on Friday, between 90% and 95% of shareholders were expected to have backed RBS's call for cash.
RBS could not afford to see the offer fail if it is to rebuild its balance sheet by tapping investors for money.
TD Water
house, a share dealing firm, said that RBS has led the way with its record rights issue and has been the focus of its trading activity in the past few weeks. Initial figures suggested the majority of TD Waterhouse's retail investors had taken up the rights to buy the extra shares.
RBS's share price closed at 245.5p on Friday – down 5.2% on the day but up 7.4% over the week.
Bryan Johnston, a director with Bell Lawrie, said: "RBS will have got away with it and shares will have been picked up. Its share price will increase in value in the next few weeks."
However, he warned that he does not expect to see banks, including RBS, become any more eager to lend money to individuals or business for the foreseeable future. The lack of liquidity will force businesses to rely on private equity.
He said: "Banks are concerned about the spectre of recession looming and are not providing the lubricant of funding essential to the industrial engine."
Following the rights issue, RBS can now continue to integrate ABN Amro and try to sell off its non-core businesses, including its insurance division and Tesco Personal Finance.
Tesco is understood to have agreed to buy out RBS's 50% stake in the personal finance joint venture in a deal estimated to be close to £1bn. The supermarket giant is issuing a trading statement this week, but it is thought it will not make any announcement on the deal until its AGM on June 27.
Analysts say £1bn seems like a high price for the venture, but that the move by Tesco makes sense as a long-term prospect.
If the deal goes ahead RBS would continue to provide banking services to Tesco PF during a handover period, after which Tesco would apply for its own banking licence from the UK regulator.
No announcement is expected on the proposed sale of the RBS insurance business, including the Direct Line and Churchill brands, until the end of the summer.
RBS hopes to raise around £7bn, but out of eight initial US, European and Asian suitors only four are thought to have put in offers, with Zurich Financial Services still being regarded as a front runner.
Meanwhile, the spotlight now falls on HBOS's impending rights issue, further details of which emerged last week, and Bradford & Bingley, which is calling for more shareholder cash and is selling a quarter of its business to US private equity firm Texas Pacific Group.
The full article contains 496 words and appears in Scotland On Sunday newspaper.
