LONDON, Sept 20 (Reuters) - Royal Bank of Scotland is talking to investors to gauge support for a 'modest' equity placement of 3 billion to 4 billion pounds ($4.91-6.54 billion), a source familiar with the situation said on Sunday.
The share issue would be used to replace a small portion of the government's economic interest in RBS, the source said.
He said RBS, led by Chief Executive Stephen Hester, had been holding talks with institutions to test the appetite for such a placement.
RBS declined to comment.
RBS is due to hand over non-voting B shares to the government in payment of the fee for participating in its asset protection scheme, thereby increasing the government's stake in the bank from the current 70 percent.
On Friday RBS rival Lloyds Banking Group said it may scale back or cancel its own participation in the government's asset protection scheme.
But analysts say an outright withdrawal from the programme would be difficult for Lloyds as the bank would have to raise up to 20 billion pounds ($32.70 billion) of fresh capital -- representing the biggest cash call on record -- to satisfy regulators that it could absorb further credit losses on its own.
($1=.6116 pounds)
(Reporting by Kate Holton and Steve Slater; Editing by Greg Mahlich) Keywords: RBS/ (kate.holton@reuters.com; +44 207 542 8560; Reuters Messaging:kate.holton.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The share issue would be used to replace a small portion of the government's economic interest in RBS, the source said.
He said RBS, led by Chief Executive Stephen Hester, had been holding talks with institutions to test the appetite for such a placement.
RBS declined to comment.
RBS is due to hand over non-voting B shares to the government in payment of the fee for participating in its asset protection scheme, thereby increasing the government's stake in the bank from the current 70 percent.
On Friday RBS rival Lloyds Banking Group said it may scale back or cancel its own participation in the government's asset protection scheme.
But analysts say an outright withdrawal from the programme would be difficult for Lloyds as the bank would have to raise up to 20 billion pounds ($32.70 billion) of fresh capital -- representing the biggest cash call on record -- to satisfy regulators that it could absorb further credit losses on its own.
($1=.6116 pounds)
(Reporting by Kate Holton and Steve Slater; Editing by Greg Mahlich) Keywords: RBS/ (kate.holton@reuters.com; +44 207 542 8560; Reuters Messaging:kate.holton.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
