Sir Tom McKillop, the chairman of Royal Bank of Scotland, is expected to give a public display of support for chief executive Sir Fred Goodwin as the bank this weekend prepares to announce a £10 billion to £12 billion rights issue, the biggest in British corporate history.

Goodwin’s fate will be decided at a board meeting today, where the final terms of the fundraising will also be decided.

However, McKillop’s expected support will not deflect criticism from RBS’s biggest investors about the make-up of the bank’s board and there will be calls for the appointment of a senior independent director with banking experience.

Goodwin will confirm this week that the bank will raise as much as £12 billion - equivalent to a third of its current market value - to repair its capital base.

He will also announce write-offs from the exposure to American sub-prime mortgages of between £5 billion and £7 billion.

In addition, the bank intends to raise between £4 billion and £5 billion by the end of this financial year from asset sales, the biggest of which could be the sale of a 20% stake in its insurance businesses, Direct Line and Churchill. These operations, while generating a lot of cash, are no longer seen as core. If a high enough offer came in for the entire business, it is possible it would be sold.

AIG, the American insurance giant, is expected to be interested in a possible deal, along with Warren Buffett’s Berkshire Hathaway and possibly Aviva, sources said. The £3 billion sale of Angel Trains, the RBS-owned leasing company, is also imminent. RBS’s Australian corporate-finance business is also for sale.

Goodwin and McKillop are expected to tell shareholders that the latest write-down, in addition to the £2.4 billion hit already taken, will be the last.

One source close to the company said: “We have no intention of coming back to the well, either to raise money or to make further provisions.”

Speculation is mounting regarding the possibility that other banks will also look to raise capital.

Bradford & Bingley last week stalled on plans for a rights issue that would have raised around £300m.

Barclays is understood to be looking at possible fundraising moves. It has held talks with several sovereign funds in the Far East, but nothing is imminent. John Varley, the bank’s chief executive, would prefer to raise capital this way rather than through a rights issue.

Analysts believe HBOS and Alliance & Leicester may decide to raise capital, now that RBS is setting a precedent.

Meanwhile, Britain’s building societies are being ordered to hoard billions of pounds of cash on their balance sheets by the City regulator. The Financial Services Authority is demanding that building societies hold a higher proportion of cash relative to their savers’ deposits.

Industry sources say that the so-called liquidity ratio has now been set at a minimum threshold of 20%, meaning that societies must have £1 for every £5 deposited held in liquid assets. Some societies have been ordered to push it as high as 35%.

It is estimated that the new restrictions could have seen as much as £20 billion of lending firepower pulled out of the financial system.

Recent accounts filed by several building societies show a huge leap in the value of cash deposits they have lodged with the Bank of England.

Yorkshire Bank had almost £400m lodged with the Bank at the end of 2007, compared with just £2.3m at the end of 2006. Britannia, Britain’s second biggest building society, had £513m on deposit with the Bank at year-end, up from just £7.3m a year earlier.

The much smaller Coventry building society had deposited £128m with the Bank, as opposed to just £1.4m at the end of 2006.

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