Royal Bank of Scotland Group is set to raise $24 billion in capital after taking an $11.7 billion dollar writedown on bad loans. The troubled bank’s capital cushion has shrunk after overpaying for its stake in the $114 billion purchase of ABN Amro and CEO Fred Goodwin has indicated that the company will cut its dividend. Bloomberg:
RBS has lost almost half of its market value in the credit turmoil of the past year. It declined 5 per cent to 354 pence at 10:20 a.m., valuing it at 35.5 billion pounds. The Bloomberg Europe Banks and Financial Services Index fell 1.2 per cent.
“They have overpaid for acquisitions and have had a weak capital base but there’s nothing in this statement which confesses that they have made significant mistakes over recent years,” said Simon Maughan, an analyst at MF Global Securities Ltd. in London. “We would like to see disposals from the global banking and markets portfolio which got them into trouble.”
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