By Steve Slater

LONDON (Reuters) - Royal Bank of Scotland (RBS.L: Quote, Profile, Research) said all but 5 percent of its shareholders subscribed for its record 12 billion pound rights issue, but turmoil in the sector rattled its shares again on Monday.

Britain's second-biggest bank said 95.1 percent of investors subscribed for its rights issue, higher than had been expected early in the process, and underwriters sold the leftover shares worth 690 million pounds to other investors.

But the "rump" was sold at a lower price than hoped as RBS shares fell almost 5 percent after U.S. investment bank Lehman Brothers LEH.N said it would raise $6 billion (3 billion pounds) to rebuild capital as it heads for a $2.8 billion second-quarter loss.

RBS launched its rights issue to rebuild one of the most stretched bank balance sheets in Europe. Its capital cushion was hit by its part in last year's takeover of Dutch bank ABN AMRO and by 8 billion pounds of writedowns on risky assets.

The strong take-up showed investors would back calls for cash even after steep falls in shares across the battered bank sector, but Lehman signalled that financial market turmoil was likely to last some time and more writedowns and capital raisings would be seen.

"It's a good level of take-up for one of the biggest ever rights issues, done in not easy circumstances," said Alan Beaney, head of investment at Principal Investment Management, which manages about 1 billion pounds. "The company (RBS) is still trading reasonably well and now doesn't have that capital worry, so maybe it can be knocked forward now."

The shares closed down 4.8 percent at 233.75 pence, cutting the bank's market value to 38 billion pounds. The rump shares were placed by underwriters UBS, Merrill Lynch and Goldman Sachs at 230p each.

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