RBS confident can keep 45 pct dividend payout ratio

LONDON (Reuters) - Royal Bank of Scotland (RBS.L: Quote, Profile, Research) told investors it should be able to pay out about 45 percent of its earnings in dividends in future years, as it asked them to approve a record 12 billion pound rights issue.

Britain's second-biggest bank has said a dividend payout ratio of 45 percent was sustainable in the medium term, and RBS Chairman Tom McKillop on Wednesday acknowledged concern among investors about the payout.

"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," McKillop said in a copy of a speech given at the bank's headquarters in Edinburgh.

RBS last month announced plans for its rights issue, the biggest ever, to cover losses taken on the value of risky assets and to repair one of the sector's most stretched balance sheets.

The bank's capital position has fallen to an uncomfortable level following its part in last year's takeover of Dutch bank ABN AMRO and turmoil in financial markets, but McKillop said that deal had built a platform "with all the attributes necessary to achieve good, sustainable growth".

RBS's move to ask investors for cash has been followed by rights issues from rivals HBOS (HBOS.L: Quote, Profile, Research) and, on Wednesday, Bradford & Bingley (BB.L: Quote, Profile, Research) as they look to hold bigger capital cushions in the face of more difficult conditions.

(Reporting by Steve Slater; editing by Sue Thomas)