The Royal Bank of Scotland today launched a UK government-backed plan to raise £19.7 billion sterling as part of Britain's banking sector bail-out. The group owns Ulster Bank and First Active here.
Under the recapitalisation plan, RBS said in a statement that it would raise £5 billion from the government in return for preference shares. The embattled group will also seek £15 billion from shareholders in a share placing underwritten by the Treasury.
Three major British banks - RBS, HBOS and Lloyds TSB - were bailed out last month after they were hit by the global credit crunch and subsequent worldwide financial crisis.
RBS added today that slowing economic growth and the ongoing crisis would 'adversely affect' its results this year. Underlying earnings sank 8% in the first nine months of 2008, compared with the same time last year, it said.
The bank revealed that it has taken another hit from assets write-downs because of the credit crunch. Write-downs totalled £206m in the third quarter, after £5.9 billion in the first half of 2008.
RBS 'expects economic slowdown, continuing dislocation in financial markets and measures to reduce risk on our balance sheet will adversely affect fourth quarter and full year results,' the group said in its statement.
The bank added that it hoped to buy back the British government's £5 billion share holding 'as soon as it is prudent to do so.'
A spokeswoman for Ulster Bank said it had no comment to make on this morning's fundraising announcement by its parent Royal Bank of Scotland.
