Newspaper reports say Royal Bank of Scotland is considering a multi-billion-pound issue of shares to raise capital.
The Daily Telegraph cited unnamed City sources as saying Britain's second-biggest bank was planning a rights issue that analysts believe will be worth at least £5 billion. Some reports say the rights issue could be up to £12 billion.
In a statement this morning, the bank said it noted the speculation, but would only confirm that it would issuing a trading statement next week. The statement is due on Wednesday.
A rights issue would represent a u-turn from RBS, which previously insisted it did not need to raise more capital.
The Daily Telegraph said the move was believed to have been prompted by further write-downs of investments linked to sub-prime mortgages on top of the £2.4 billion already reported. There is also pressure from the British government for banks to strengthen their balance sheets in return for an offer of much-needed liquidity.
The British government and Bank of England are working on a plan to allow banks to temporarily swap mortgage-based securities for government bonds.
