RBS gets nod for record rights issue

By Steve Slater

LONDON (Reuters) - Royal Bank of Scotland (RBS.L: Quote, Profile, Research) said it won "overwhelming" support for its record 12 billion pound rights issue and reassured investors they should get about 45 percent of future earnings in dividends.

Britain's second biggest bank said on Wednesday 95 percent of shareholders who voted backed the rights issue and 96 percent of votes cast supported paying the interim dividend in shares.

The fundraising will cover losses RBS has suffered from a drop in the value of risky assets during the global credit crunch and help repair one of the sector's most stretched balance sheets.

RBS Chairman Tom McKillop welcomed the "overwhelming support" to rebase the capital position and said it positioned the bank well.

He earlier reassured investors concerned about the bank's future dividend that a payout ratio of 45 percent was sustainable in the medium term.

"Whilst the board must take each dividend decision in the light of the circumstances prevailing at the time, we would expect in future years to continue to pay approximately that proportion of the group's earnings as dividends," he said at the investor meeting at the bank's headquarters in Edinburgh.

The support for the rights issue came hours after Bradford & Bingley (BB.L: Quote, Profile, Research) became the third bank in less than a month to ask investors for cash.

HBOS (HBOS.L: Quote, Profile, Research) is also planning a rights issue, as banks increase capital cushions in the face of ongoing market turmoil and more difficult conditions.