Investors should take confidence in RBS rights issue

Nick Raynor, Investment Adviser at The Share Centre comments on today's record rights issue by Royal Bank of Scotland: "Investors who have stuck with RBS through the recent market turmoil and the ABN Amro acquisition, should feel a little more optimistic about the company's future, given today's announcement. For those investors taking a longer term view we would recommend they consider taking up the offer.

"Firstly, the rights issue is fully underwritten, so if ordinary shareholders don't take up the offer, RBS has been fully backed by Goldman Sachs, UBS and Merrill Lynch. In addition to this, RBS is looking to raise a further £4billion by selling off assets, including its insurance units, such as Churchill and Direct Line. By raising the proposed £12billion this will ensure RBS is on a firmer footing to fight the current economic climate.

"RBS has taken the bull by the horns, being the first bank to offer a rights issue on the back of the credit crunch. By doing this they are giving themselves the best possible chance to raise the required capital. It will be interesting to see which banks may follow suit".

As expected investor interest in the bank was high last week. RBS was the most popular share traded at The Share Centre as well as the most popular searched for company on its website share.com.