That was then, this is now. Those six words are likely to be the repeated refrain of the next few weeks as banks explain why they have changed tack so radically in the space of two months. Royal Bank of Scotland (RBS) acted the pioneer and offered the template today: market conditions have further deteriorated and the credit drought is likely to be much more prolonged than previously thought. It is now appropriate to batten down the hatches, strengthen the fortifications and prepare for a long siege.

The £12 billion of new equity being sought is unprecedented in Britain, twice the size of the previous biggest rights issue. It would have been even bigger, presumably, had RBS not chosen to auction off some plum assets, such as its Direct Line insurance business. It is also deeply discounted — shareholders who decide not to take up their rights will be seriously diluted.

Certainly, it will boost the RBS balance sheet and should be enough to see it through all but the most catastrophic of credit downturns. RBS has heeded those who advise banks to go early and go big when seeking fresh capital from shareholders.

The decision to pay out the 2008 interim dividend in shares rather than cash is logical. It is perverse to ask shareholders for emergency cash with one hand and then pay it out with the other. But for the many shareholders who own RBS as a yield stock, held for the income, that is little consolation. They will have to sell the shares at depressed prices.

Will it be enough to save Sir Fred Goodwin, the embattled chief executive? Temporarily, yes. In the medium term, his job security is much more uncertain. Sir Tom McKillop, the chairman, gave him his full support this morning and offered the concession of three new non-executive directors to help to curb his sometimes dictatorial approach. Few shareholders want any drastic change at the top when there is still the difficult business of hammering together the ABN Amro acquisition. Sir Fred has at least a reprieve.

If ABN quickly delivers fruits similar to the NatWest deal — one of the great acquisitions of the past quarter-century — Sir Fred could yet win fresh laurels and survive. But his standing with shareholders has deteriorated in the past few weeks — some will find it hard to forgive the further £6 billion of writedowns unveiled this morning. Any further stumbles or disappointments and it is hard to see him still at the helm in 18 months.

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