RBS considers £4bn share issue - papers

Royal Bank of Scotland is to consider a £3bn-£4bn share issue to reduce the stake it would hand to the government for joining its toxic assets insurance scheme and has approached its biggest investors about the idea, the FT reports.

Plans are "tentative" and Stephen Hester, RBS's chief executive, is still "putting out feelers" to its shareholders about a "modest-sized" share issue, according to a person familiar with the situation.

Such a decision would see RBS join Lloyds Banking Group in scrambling to raise capital to limit the use of what banks involved in the government's new asset protection scheme view as a costly "bad bank" programme.

RBS is due to issue about £19bn of non-voting B shares to the government as a fee for putting £325bn of toxic assets into the bad bank.

That would increase the government's stake in RBS from 70% to about 85%. See story...

AN ATTEMPT BY British consumers to rein in spending after the harsh lessons of the recession could limit growth and therefore depress household income further, the Bank of England warns today, according to The Telegraph.

Bank says tight credit could limit spending. It says in its latest Quarterly Bulletin that household decisions to spend or save will have major consequences for the economic outlook, because consumer spending accounts for two-thirds of total spending in the UK.

"Any attempt to reduce consumption is likely to push down on output and hence household incomes. That could actually make it harder for households to increase their savings - known as the paradox of thrift."

The Bank says that even if households saved as much as 10% of income, it would take nine years to bring wealth back up to the average of the last 20 years. See story...

THE SUN IS setting on the US dollar as the ultra-loose monetary policy of the US Federal Reserve forces China and the vibrant economies of the emerging world to forge a new global currency order, according to a new report by HSBC, The Telegraph also reports.

"The dollar looks awfully like sterling after the First World War," said David Bloom, the bank's currency chief.

"The whole picture of risk-reward for emerging market currencies has changed. It is not so much that they have risen to our standards, it is that we have fallen to theirs. It used to be that sovereign risk was mainly an emerging market issue but the events of the last year have shown that this is no longer the case. Look at the UK - debt is racing up to 100% of GDP," he said. See story...