Sir Fred Goodwin, the beleaguered chief executive of Royal Bank of Scotland, has let it be known that he will stand down if necessary to secure a rescue capital injection for the bank.

Sir Fred is understood to be determined that his continuation in the job should not be a barrier to RBS gaining fresh capital either from the Government or from the private sector.

Ministers, while not wishing to be accused of meddling, are sensitive about being seen to be handing over billions of pounds of taxpayers’ money to an organisation still headed by the man who led it to the brink of collapse. RBS needs about £10 billion to boost its capital strength to a level acceptable to the tripartite authorities, analysts estimate.

The bank is thought to be considering a rights issue of ordinary shares underwritten by the Government rather than the expected preference shares, because they count as core tier 1 capital, the highest-quality kind of capital. However, any issue of ordinary shares is likely to dilute existing shareholdings severely. RBS shares fell 25 per cent to 71.7p yesterday.

There has been growing speculation in recent days that Sir Fred could stand aside and be replaced by Stephen Hester, the chief executive of British Land and an RBS nonexecutive director for the past few weeks.

Some investors would also like to see Sir Tom McKillop, the chairman, replaced by Sir Philip Hampton, the chairman of J Sainsbury and a former finance director of Lloyds TSB. However, some investors would be concerned if both positions were changed at the same time.

Ministers are also thought to be sensitive about any pay-off for Sir Fred. He was paid £1.2 million in base pay last year, suggesting that any severance payment could be well into seven figures. Such a payment would be deeply embarrassing for the Government, which repeatedly has lectured the City on the dangers of rewards for failure and has insisted that its rescue of the banks was dependent on them showing executive pay restraint.

Other banks are also expected to consider rights issues underwritten by the Government alongside preference shares because they count as better-quality capital. From the point of view of taxpayers, however, the risk is greater because ordinary shares rank lower down the pecking order for dividends or for the proceeds of any winding up.

Alistair Darling, unveiling the £500 billion package on Wednesday, said that £25 billion would be available for preference shares or permanent interest-bearing shares (PIBs) and an additional £25 billion for all kinds of equity including ordinary shares.

Barclays said yesterday that it was considering “a number of options” for raising the fresh tier 1 capital that it needs and confirmed that it had agreed with the Government to raise it by the end of the year.

Barclays is seen as needing £5 billion to satisfy the Government that its balance sheet is strong enough. The bank had hoped to tap sovereign wealth funds and other overseas institutions that have supported previous capital-raisings over the past year.

However, with sentiment over the banks souring again, some analysts questioned whether these institutions would risk throwing good money after bad. Barclays shares fell 14 per cent to 207½p.

Senior bankers said that one of the problems with determining the suitable level of capital in the future is that the sums change as soon as banks put future increases in lending into the equation. The Government wants capital ratios to have enough leeway so that the banks can start to make fresh net new lending again.

Jonathan Pierce, banking analyst with Credit Suisse, estimated that RBS would be encouraged to raise £10 billion, HBOS £5 billion, Barclays £5 billion and Lloyds TSB £4 billion.

The recapitalisation could dilute existing HBOS shareholdings by 60 per cent, RBS shareholdings by 40 per cent and Barclays and Lloyds TSB shareholdings by 25 per cent, he estimated. There was a good chance that existing shareholders could participate in any share issue, he argued. The alternative was to see a 20-40 per cent share of the banks falling into state hands.

It was not clear last night how any respective capital-raisings by Lloyds TSB and its takeover candidate HBOS could affect the existing terms, which have already been modified once before. Lloyds is offering 0.833 of a share for each HBOS share. HBOS shares fell 19 per cent to 124.2p, while Lloyds shares were down 22.35p, 11 per cent, at 189.4p.

HBOS shares are still trading at a 21 per cent discount to the implied value of the Lloyds offer, suggesting that some investors believe Lloyds will exploit HBOS’s apparent vulnerability and push for sweeter terms. Due diligence has begun, but both sets of shareholders still have to approve any deal, which is unlikely to be completed until the end of the year.

When Barclays, in its £4 billion capital-raising over the summer, sought fresh shareholders, the Qatar Investment Authority, China Development Bank and Japan’s Sumitomo Mitsui Financial Group took stakes. It is thought the bank is returning to these investors to avoid or minimise having to tap the Government.

Abbey, one of the eight UK financial institutions participating in the Government’s bailout plan, demonstrated its apparent strength and liquidity by announcing that it had injected £1 billion into London’s interbank market, the paralysed wholesale market in which banks lend and borrow from one another. Abbey, owned by Banco Santander, of Spain, said the cash had been made available to other banks for periods of three or six months.

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