Despite repeated denials by RBS chief executive, Fred Goodwin, less than two months ago that 'there was no need for a rights issue', according to the Glasgow Herald 'U-turns rarely come with more billions attached' (22 April).
Immediately speculation turned to which other lenders would be forced to appeal to their shareholders for funds with HBOS and Barclays named as front-runners.
Goodwin and RBS chairman Tom McKillop, whose 'main qualification for the job seemed to be only that he was Scottish' (The Independent, 22 April) were said to be able to hang onto their jobs as 'RBS has no ready-made successor' (The Sun, 22 April). But it was predicted that RBS will be forced into selling both Direct Line and Churchill Insurance.
Based on 41 items from 20 - 22 April 2008
WHAT THE BLOGS SAY
The blogosphere's reaction to the news of the Royal Bank of Scotland's impending rights issue was predictably vitriolic, and reflected a much greater degree of cynicism than the papers. Viewed against a background of large-scale job losses in the city, the announcement was taken by many bloggers to indicate that the current financial crisis looks set to deepen in the near future.
Most of those posting comments predicted that the bank's decision to tap shareholders will make it easier for rivals to follow suit, and that Barclays and HBOS may be next in line.
A small proportion of bloggers were optimistic, suggesting that the announcement was evidence that RBS had decided to come clean about its past mistakes, and would subsequently emerge as one of the UK's stronger banks. News of a rise in RBS's share price was seen to vindicate this point of view.
Regardless of their take on the implications, bloggers were generally unanimous in their opinion that a rights issue, unless clearly linked to acquisitions or expansion plans, reflects poor husbandry at best, and serious miscalculation at worst.
Most thought that the position of RBS Chief Executive Fred Goodwin has become untenable, and expected a resignation in the near future.
Analysis conducted by Nielsen Online from a source of over 70 million blogs www.nielsen-online.com