Royal Bank of Scotland Fred’s dilemma

Royal Bank of Scotland has issued so much equity to fund deals that any suggestion it is on the acquisition trail sends its shares tumbling. Its latest possible target is Bank of China (BoC). RBS may have to pay as much as £2bn for a 20% stake. RBS does not need to issue equity to fund a deal of this size. So why have its shares responded in the usual way? BoC presents Sir Fred Goodwin, RBS’s chief executive, with a dilemma. On the one hand, China is a market that offers genuine growth prospect...