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RBS 'looking to raise $640m capital next month'

The Royal Bank of Scotland (RBS) is set to raise as much as £400 million ($640 million) in fresh capital by reinstating dividends on its preference shares next month.

That is according to a source with knowledge of the financier's plans, who has today (2 April) told the Daily Telegraph that senior officials within the firm are currently working on this plan in the hope it can be completed in May.

At present, the company's management is looking to raise funds in order to re-privatise the 82 per cent stake held by the government and see "turning the tap back on" with regard to the £350-£400 million dividend as a way of going about this.

Despite the fact no final decision on the process can be made until RBS has applied for and received approval from the Financial Services Authority and the government, the insider noted: "Paying a dividend is good market behaviour and is an important signal to debt holders and equity holders."

By Asim Shah