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According to Legal and General Investment Management (LGIM), RBS, in the preceding weeks before it announced its £ 12 billion rights issue, stated that it could not see of any circumstance under which it would require more capital. RBS stated it did not need more capital Peter Chambers, the Chief Executive of LGIM, in a meeting of the UK Treasury's committee meeting on the banking crisis, stated his company had visited all the major banks in the first quarter of 2008 and asked the Chairman or Chief Executive whether the bank needed to raise more capital. "All of them, to an individual, said there was no need to raise capital and indeed one was very adamant, and when we asked under what circumstances they would need more capital, their response was, 'There are no circumstances under which we would need capital'. That was six weeks before their rights issue." LGIM demanded the removal of the Chairman and Chief Executive Officer Mr Chambers said that, shortly after the initial rights issue was announced, his company met with Bob Scott, RBS's senior independent non-executive director, and also spoke with Peter Sutherland, the BP chairman and also a non-executive at the bank, demanding changes to the Board. "We suggested that the heads of the company were no longer tenable and that the chairman and the chief executive should depart - not at the same time, that wouldn't be constructive." Mr Chambers said LGIM was told the message would be taken to the RBS board, and that it later received notice that it would be"pleased by an announcement at the end of August." When the announcement came, it only covered the appointment of three new non-executive directors. "There was nothing about the chairman and chief executive, and we engaged with them again on the subject, but the only way the chairman and chief executive stood down was when the government required it as part of the recapitalisation," he said. So was the RBS Board dishonest? We have created a timetable of events. 28 February 2008 At the presentation to analysts of the 2007 Annual Results, Sir Fred Goodwin stated, "There are no plans for any inorganic capital raisings or anything of a sort." 18 March 2008 The 2007 Annual Report is issued. Sir Fred Goodwin stated, " At the time of the bid for ABN AMRO we indicated our intention to rebuild our capital ratios. We remain committed to this goal, and the improved financial returns now expected on the acquisition will help to accelerate delivery of the Group's capital regeneration commitments." 17 April 2008 This was the last day for electronic submission of shareholder voting on resolutions to be put to the Annual General Meeting. The Chairman was up for re-election. 18 April 2008 RBS issued a statement. "The Royal Bank of Scotland Group plc (RBS) notes recent speculation about a possible rights issue. RBS confirms that its Interim Management Statement covering trading performance and capital will be made next" 21 April 2008 RBS issued a statement. "Following its statement on Friday 18 April 2008 and recent speculation The Royal Bank of Scotland Group plc confirms that it is considering a Rights Issue. A further announcement will be made in due course." 22 April 2008 RBS announced the largest rights issue in UK corporate history, £ 12 billion. 23 April 2008 The AGM was held in Edinburgh. What we don't know, is when did LGIM ask RBS about the need to raise capital nor when the Board or Executive Committee first discuss the need to raise additional capital. We would need to see the minutes of Board and Executive Committee meetings as well as receive further information from LGIM. What we do know is that RBS did not announce the rights issue until after the deadline for institutional shareholders to submit their vote on shareholders resolutions at the AGM. Seven directors stood for re-election, including the Chairman. All of the seven up for re-election were re-elected, each receiving 98+% of the vote. One can only assume that the Board wanted to be re-elected prior to announcing the rights issue. With the Treasury select committee inquiry, a class action suit in the United States, a Scottish MP's call for a Serious Fraud Office investigation, another Scottish MP's call for a police investigation and a Small claims suit launched already, it may not be long before we are able to fill in the gaps in our timetable.
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