Royal Bank of Scotland Group PLC, which reportedly is contemplating going to the market to raise billions of pounds, said Friday that it will make a statement on its plans next week.
The Daily Telegraph reported that the bank was looking at a possible rights issue worth between 5 billion pounds ($9.9 billion; euro6.2 billion) and 12 billion pounds ($23.7 billion euro14.9 billion) to shore up its position.
The Financial Times, however, quoted unidentified sources as saying a rights issue is one of a number of options the bank was considering. The newspaper reported that RBS needs about 9 billion pounds ($17.8 billion, euro11 billion) to bring its capital ratios in line with its major British competitors.
"RBS notes recent speculation about a possible rights issue," the group said in a statement to the London Stock Exchange.
"RBS confirms that its interim management report covering trading performance and capital will be made next week."
RBS shares were down 2.1 percent at 358.25 pence ($7.09; euro4.45) at midmorning on the London Stock Exchange.
RBS, Britain's second-largest bank by market capitalization, stretched its cash reserves last year in leading a consortium including Belgian-Dutch group Fortis and Spain's Banco Santander in the taking over the Dutch giant ABN Amro Holding NV.
RBS, which controls Natwest and Ulster Bank, reported spending euro14.3 billion ($22.8 billion) for its share of the takeover.
"We believe RBS will have little trouble raising capital and that 10 billion pounds ($20 billion euro12.4 billion) or so would materially remove the capital risk bear story at RBS," said Alex Potter, an analyst at Collins Stewart.
"Therefore, while the rights issue will be dilutive, it is likely to mark the floor for the stock."
Matt Buckland, a trader at CMC Markets, said a rights issue would not be a sign of good news for the banking sector.
"If RBS announces a rights issue and it is taken up by investors, then we could see other banks follow suit," Buckland said.
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