May 14, 2008 – 8:58 am

After absorbing dutch bank ABN Amro and defiantly raising it’s fiscal year 2007 dividend the Royal Bank of Scotland declared there would would be no need to raise new capital. But when the bank woke with a big fat belly doubling portfolio of mortgage-backed securities it finally coughed up to the disgust of investors the notion of a rights issue, and yesterday management won formal approval to dilute itself by $24 billion worth of new shares.

Royal Bank of Scotland Group Plc won shareholder approval to raise 12 billion pounds ($23.4 billion) in the sale of new shares to shore up capital depleted by write downs and the takeover of ABN Amro Holding NV.

Investors gathered at RBS headquarters in Edinburgh voted 95 percent in favor of the plan to issue 6.1 billion new shares in a rights offer. The bank also won 96 percent approval to distribute 1 billion new shares to pay the first-half dividend in stock rather than cash. The new shares, offered at a 46 percent discount to the April 21 price, will increase stock outstanding by about 40 percent, diluting investors’ current holdings.

Don’t be fooled by the 90% + approaval, investors had no choice. Cash stream is a banks blood flow and without it RBS has no pulse.

So far no heads have rolled and Chairman Tom McKillop made it perfectly clear that would not be happening. After gracing the shareholders with a fitting but formal apology

company directors back Chief Executive Officer Fred Goodwin, McKillop said again today.

“The right thing going forward is to support existing executive management,” McKillop said. “They have expertise to deliver the many opportunities ahead of us.”

Are you kidding me?!!! They had the expertise to put you in this fix in the first place. And that’s putting it euphemistically.

The buy out of ABN was a botch to begin with, it made no sense except to the ones directly involved with the fees, royalties and sundry of other payoffs and kick backs, all quite legal if not proper I assure you. Show me the directors and insiders who benefited from them and I’ll show you who’s protecting Goodwin. But Mr. Goodwin well knows that a CEO is just the right rank for a patsy, high enough to quench blood thirst of angry shareholders and draw the attention of investigators, while low enough to give up with out skipping a beat.

Details of the investigation are buried in the prospectus for the bank’s imminent £12 billion rights issue, which will be put to a vote at a shareholder meeting this week.

I seriously doubt much will come of this SEC investigation into his majesty, but if it does I promise you they will eagerly give Goodwin up.

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