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RBS evaluating appetite for rights offering: sources

Royal Bank of Scotland Group PLC (RBS), Britain’s biggest ­government-controlled bank, is in talks with shareholders to gauge the appetite for a rights offering, two sources familiar with the talks said.

The bank held the discussions last week, said the sources, who declined to be identified because the negotiations are still at an early stage. RBS could raise between £3 billion (US$4.86 billion) and £5 billion, one of the people said.

The government’s stake in the Edinburgh-based lender is set to increase to more than 80 percent under the terms of the Asset Protection Scheme, the UK’s toxic asset insurance program. RBS chief executive officer Stephen Hester is seeking to limit that increase by raising cash from investors, one of the sources said.

RBS raised £12.3 billion in a rights offer in June last year following its purchase of ABN Amro Holding NV by former CEO Fred Goodwin. That acquisition led the bank to report a £24.1 billion loss for last year, the biggest by a UK company, after writedowns surged. Goodwin was ousted last year as the government provided a £20 billion bailout for RBS.

RBS said in February it would sell as much as £19 billion of non-voting B shares to the government in return for placing £316 billion of toxic assets into the UK insurance plan. That sale would boost the government’s stake from its current 70 percent.

Lloyds Banking Group PLC, 43 percent owned by the taxpayer, is also considering a share sale to reduce its reliance on the government. The bank agreed to insure £260 billion of risky assets with the government six months ago in return for a £15.6 billion fee.
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