RBS defends cash call to shareholders

By Steve Slater

EDINBURGH (Reuters) - Royal Bank of Scotland (RBS.L: Quote, Profile, Research) executives on Wednesday defended a 12 billion pound ($23.8 billion) rights issue and told shareholders the "decisive action" left the bank well placed to seize growth opportunities.

Executives at Britain's second-largest lender have come under fire from investors since plans for the record cash call emerged, over what many saw as a radical U-turn for a bank which had long denied a need to shore up its balance sheet.

"The time had come to take decisive action to rebase the capital," Chairman Tom McKillop told shareholders at the annual meeting on Wednesday. "We're convinced the actions announced yesterday were in the best interests of shareholders."

RBS has brushed aside concerns about its top management team but some major shareholders have said McKillop, Chief Executive Fred Goodwin and the board would have to work to keep their backing, calling for a succession plan to be put in place.

"It's a painful decision and an unwelcome decision, but I passionately believe it was the right one," Goodwin said of Tuesday's rights issue.

Asked about the volte-face at the bank, which insisted as late as February there was no need to raise capital, he said events in March were "unprecedented", citing a sharp drop in asset valuations and a deteriorating economic outlook.

Small shareholders at Wednesday's meeting agreed with Goodwin, blaming the economic turmoil that has battered the industry for RBS's woes, with most naming him as the right person to guide the bank through its troubles -- for now.

"Fred has generally done a good job and he's allowed one mistake," Gregan Crawford, a shareholder from Edinburgh said.