RBS and Lloyds won't need to issue shares to meet capital requirements

(Source: Reuters)

*RBS confirms that a share issue will not be required

RBS has announced that a share issue will not be necessary in order to meet regulatory capital requirements. This follows confirmation by Lloyds that they also will not need to issue equity.

Our banking reporter Tim Wallace:

Everyone panicked when the Bank of England said banks had great big capital black holes. Turns out the two most at risk - Lloyds and RBS - are fine. They still need to raise their capital levels, but won't need to issue shares, which had been a worry for shareholders - including the government. Instead Lloyds and RBS plan on using their increasing income to build up the buffer and reassure regulators and markets.

Stephen Hester, RBS CEO commented:

We are pleased with RBS's progress and momentum towards completing RBS's return to full financial health. Our balance sheet has been transformed and our core business has plentiful surplus funding to support continued growth in lending.

The Prudential Regulation Authority (PRA) has released a statement on the capital positions of Lloyds and RBS. Full text below.

The Prudential Regulation Authority (PRA) is taking forward with the major UK banks the adjustments to capital positions identified by the Financial Policy Committee (FPC) relating to expected future losses, conduct costs and prudent risk-weighting. The PRA has set out the capital requirements for Lloyds Banking Group and Royal Bank of Scotland. The two banks have advanced their plans to a position where disclosure is appropriate. Once discussions have concluded with all banks, more information will be provided along with confirmation that, where necessary, banks will take appropriate steps to ensure that they meet the FPC’s recommendation on capital.