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Robert Peston warns that RBS would seem to need to raise a few billions of additional capital


BBC Business Editor, Robert Peston , the one who was one of the first to highlight the then developing Lehman’s collapse and Northern Rock failures, as well as RBS virtual nationalisation, suggests RBS, one of UKs largest banks and supported by UK tax payers, could need substantial amounts of cash:

“That a Europe-wide capital-raising exercise could be painful for the Germans. And if ministers want to do what investors and creditors apparently want them to do, which is to force a serious recapitalisation of big French banks, the minimum capital threshold would have to be set high, at 8%.

Given that these measures to strengthen banks will almost certainly apply to all EU banks, not just eurozone banks, what impact would they have on British banks.

If the minimum stressed capital ratio were set at 8%, Royal Bank of Scotland, Barclays and Lloyds would all be forced to raise new capital.

Among the British banks Royal Bank of Scotland is most vulnerable to being forced to raise new capital, because under July’s health checks its stressed capital ratio emerged relatively low at 6.3% (compared with 7.3% for Barclays, 7.7% for Lloyds and 8.5% for HSBC).

So if the new minimum capital bar were set at 7% (and we have no idea where it will ultimately be set) RBS would seem to need to raise a few billions of additional capital.

http://www.bbc.co.uk/news/business-15212476

Bank of England out of desperation pumped in £65 billion in one day, of QE last Thursday and Meryn King, the Governor of Bank of England, fears crisis could develop into worst financial crisis ever:
http://www.bbc.co.uk/news/business-15208235
http://www.bbc.co.uk/news/business-15210112

– LFM

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