Royal Bank of Scotland is expected to write down US sub-prime-related assets worth well over £1billion when it announces its full-year results on Thursday.

The bank is expected to announce a dividend increase to try to assauge fears about its capital ratio, which is thought to be the lowest of any bank in Europe after its takeover of ABN Amro, the Dutch bank, last year.

Analysts expect Sir Fred Goodwin, RBS's chief executive, to announce plans to offload assets, including Angel Trains and Condor Ferries, rather than to try to shore up the bank's capital ratio with a much-feared rights issue.

In a research note, Credit Suisse said: “Investors will rightly want to know how RBS plans to boost its capital position and it would not surprise us if certain asset disposals were announced around the time of the numbers.”

RBS said in December that it would write down £950million of investments in American sub-prime mortgage-related assets and £250million on its leveraged finance business. At the same time, ABN Amro wrote down £300 million on US sub-prime.

Credit markets have continued to deteriorate since late last year and last week three banks reported increases on previously announced charges. Alliance & Leicester kicked off the week with a £185million writedown, followed by Barclays, with £1.6billion. Lloyds TSB revealed a £280 million charge.

In November last year RBS had a £4billion exposure to collateralised debt obligations (CDOs) invested in asset-backed securities, plus a leveraged finance portfolio of £12billion and a book of commercial mortgage-backed securities worth £4billion. These figures included assets owned by ABN Amro and were net of hedges, which could include contracts with monoline insurers that have since been downgraded.

RBS is thought to be part of a group of banks, including Citigroup, UBS, Wachovia, Barclays, BNP Paribas and Société Générale, that is working on a plan for Ambac, the American monoline, to raise extra capital to keep its AAA credit rating. The rescue plan could be announced within days.

Last year RBS led a consortium that paid £47billion for ABN Amro, but the fallout from the collapse in America's mortgage market led to speculation that that RBS may have hugely overpaid for the Dutch bank. Sir Fred is expected to be keen to reveal better-than-expected synergies from the takeover.

Standard Chartered, the emerging-markets-focused British bank, will report its 2007 results tomorrow, followed by HBOS, the mortgage market leader, on Wednesday.

Meanwhile, sources close to Lloyds TSB played down speculation that it was planning a bid for its rivals Alliance & Leicester or Bradford & Bingley. The bank's chief executive and chairman said on Friday that Lloyds TSB constantly weighed up takeover targets and that banks were particularly cheap after the liquidity crunch, but that Lloyds TSB's emphasis remained on organic growth.

Alliance & Leicester sparked takeover rumours after giving warning last week on its 2008 revenues.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax