Analysts: RBS investors should fear capital hike over bank split

Tim Wallace
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INVESTORS in RBS could face a massive blow from the Financial Policy Committee at the end of this month if it forces the bank to raise extra capital, analysts warned yesterday.

Although Bank of England governor Sir Mervyn King this week argued in favour of splitting the bank up and selling it off, Ian Gordon from Investec believes the more likely risk is a round of capital raising.

“The market has until recently been ignoring this issue, pretending it will be nothing – but MPs have suggested it could come in at around £30bn for Lloyds and RBS,” he said.

“Anything remotely of that order would have a devastating impact on share prices. It is not likely to be of that scale, but even single-digit billions for RBS would dilute returns, hurting the valuation and price.”

“This is a genuine risk and represents an unhelpful dose of uncertainty in the market.”