The cash injection, sure to prove unpopular with the bank's investors, was agreed at a board meeting yesterday - and reflects severe balance sheet concerns at RBS.
Total write-downs from the credit crunch at the bank have exceeded $10 billion - and last year's takeover of Dutch bank ABM Amro by a consortium led by RBS has also proved a severe financial drain.
Therefore, analysts expect that Sir Fred - nicknamed 'Fred the Shred' by some for his apparent love of cost-cutting - will be given a rough ride by shareholders.
Speaking yesterday, the bank chief also appears to anticipate that this will be the case.
"I can well understand that this is not an easy time for shareholders - I am a shareholder too," he commented.
"Given the change we have seen in the world, [the rights issue is] just the right thing to do."