RBS rumoured to be preparing rights issue

Speculation is rife that the Royal Bank of Scotland is preparing for a rights issue to raise as much as £12bn.

Analysts suggest it will take up to that amount to bring its core capital up to the European average.

The bank, the second largest in the UK, is thought to have been looking for fresh funds since writing down £1.6bn in mortgage debt and acquiring parts of Dutch bank ABN Amro.

RBS has issued a statement acknowledging the rumours and says it will address questions on its capital and trading positions in an update next week.