Sir Fred Goodwin, the chief executive of RBS, faced growing pressure today over his future with Britain's second-largest lender after revealing plans to raise £12 billion through a rights issue to shore up its balance sheet.

The bank revealed today that it would take another £5.9 billion in writedowns on sub-prime-related assets and loans on top of the £2.4 billion in writedowns announced in February.

RBS said that it also hoped to make £4 billion on disposals including the possible sale of its insurance arm, which owns Direct Line and Churchill, although it said there would be "no fire sales".

Since the prospect of the rights issue emerged last week, Sir Fred has been facing questions over his future at the bank, which he steered through last year's joint €71 billion (£56 billion) acquisition of ABN Amro, the Dutch bank.

The RBS chief admitted today that he, like many colleagues at other financial institutions, had been under pressure "for quite some time" given the turmoil in financial markets.

"I'm 100 per cent focused on the future and taking the business forward," he said.

There has been increasing speculation that the RBS board turned down an offer by Sir Fred to step down ahead of today's rights issue announcement. The bank refused to comment on whether he had tendered his resignation.

David Cumming, head of equities at Standard Life Investments, backed the RBS chief saying he "justifies continued support".

"However, he has to fully engage with his shareholder base and a strengthened non-executive board to maintain that support," Mr Cumming cautioned. Standard Life Investments holds a 3.5 per cent stake in RBS

Sir Tom McKillop, the RBS chairman, acknowledged today that the bank had paid highly for ABN.

"Relative to bank valutions today, one would say it was a very high price," he said.

Until now, Sir Fred has consistently refused to raise further capital, even though the ABN deal has stretched the bank's finances.

However, Sir Tom stood by his chief executive today.

He said: “The board unanimously believes that our executive team has all the ability to steer the bank successfully through this tricky period in financial markets.”

The bank is searching for three more non-executive directors to strengthen the board's independence.

RBS said today that it would offer 11 new shares for every 18 existing shares an investor holds at 200p each — a 46.3 per cent discount to the 372.5p closing price of RBS shares yesterday.

Shares in RBS fell 3.83 per cent to 358.5p in early trading today.

RBS also revealed that it would force shareholders to take their interim dividend in shares rather than in cash as it asked them to support the rights issue.

The bank said that it would be "prudent" to pay the dividend fully in shares for the first time in its history as it issued more shares to improve its capital position.

However, RBS said that it expected to pay its the final 2008 dividend in cash, although the dividend was likely to be lower as a result of the rights issue.

In a first-quarter update, the bank said that its performance remained satisfactory despite a poor performance in its global banking and markets business.

The decision to issue a dividend in shares follows a similar move by UBS, the Swiss bank, which asked its shareholders to accept a cut-price scrip dividend as it embarked on an emergency SwFr15 billion (£7.5 billion) rights issue.

RBS said that it hoped to boost its Tier 1 capital, which is the core measure of a bank's financial strength, to at least 6 per cent.

At present, after its joint takeover of ABN, RBS's Tier 1 capital is 4 per cent — one of the lowest in the banking sector.

RBS has refused to rule out further capital raisings but said that today's move was "a material stepping-up" of its capital position.

Sir Tom said in a statement today: "This is a difficult time for the financial services industry, and it has presented us with specific challenges.

"Central to these has been the question of our capital ratios, which have been the focus of much attention, both internal and external, over recent months."

RBS said that it was expecting to increase its Tier 1 capital by £4 billion by the end of this year.

The bank said it was confident that the rights issue, fully underwritten by Merrill Lynch and Goldman Sachs, would be well supported.

The bank denied that regulators had asked it to improve its capital position.

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