Sports Calendar

RBS has yet to fix the price of the rights issue, which is expected to be at a discount of between 30 per cent and 50 per cent to the current share price.

RBS, which owns NatWest, is also set to announce a further writedown of between £5 billion and £7 billion.

The figure has yet to be agreed because management wants this to be the last time it is forced to mark down the value of assets.

The bank has already announced writedowns of about £1.7 billion on the value of mortgage-backed securities, loans to private equity groups and securities guaranteed by cash-strapped bond insurers.

A source close to RBS said that the planned rights issue would raise “closer to £10 billion” than the £12 billion that was the top of the range that some analysts had been expecting.

Although both Churchill and Direct Line are performing well, insurance has become less central to RBS’s business as it concentrates more on core banking activities after the acquisition of ABN Amro last year.

Snatching the Dutch bank from Barclays, the rival bidder, has stretched RBS’s balance sheet.

It paid about €71 billion (£56.2 billion), with Banco Santander and Fortis, for ABN Amro, a price that some analysts believe was too high.

There will be a full board meeting today, conducted over the telephone, to confirm the proposals, which will be announced to the stock exchange tomorrow.

The bank’s annual meeting in Edinburgh will take place on Wednesday as planned.

Although Sir Tom McKillop, the chairman of RBS, will back Sir Fred, there will be changes to the board.

The bank aims to recruit new non-executive directors to show that its corporate governance is sound.

RBS cut 200 staff in its global banking and markets business this month, mostly in London.

UBS has joined Goldman Sachs and Merrill Lynch in underwriting the rights issue.

Shares in RBS, which have slipped 14 per cent since the start of the year, were volatile on Friday but ended up 18p, or 4.9 per cent, at 384p after news of the rights issue, the largest in British history, emerged.

If the bank goes ahead with the rights issue, it could prompt other British banks to follow suit.

Analysts believe that Barclays and HBOS are the most likely to try to bolster their balance sheets through a rights issue.

The banks should receive a fillip today as Alistair Darling, the Chancellor, is set to announce a £50 billion package to help to ease bank liquidity worries and restart interbank lending.

The Bank of England is expected to swap £50 billion of government bonds for lenders’ assets in an attempt to ease the crisis in the mortgage market, which has seen lenders drop thousands of products in the past year.

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