RBS chairman Tom McKillop told the group's annual general meeting here that banks as a whole had endured a difficult period in recent months because of the knock-on effects of the crisis in the US subprime mortgage sector.

But he said the company's appeal to shareholders for 12 billion pounds (S$32.5 billion), announced on Tuesday, was not taken lightly and it was in the company's best interests as it sought to raise funds to offset writedowns and its costly acquisition of Dutch bank ABN Amro.

RBS's performance into January and February 2008 was 'satisfactory,' he said, but in March the situation 'took on a very different shape with further, severe deterioration in credit markets and a worsening outlook for the wider economy.

'As soon as this became clear to the board, we decided that the time had come to take decisive action to reposition our capital base,' he added.

Mr McKillop was confronted by a number of angry shareholders, including Brian Peart, the chairman of the United Kingdom Shareholders Association, who accused the board of 'incredibly bad management.'

Another, John Steen, criticised its remuneration policy, saying directors were paid salaries 'above anything the rest of us can only dream of.' RBS chief executive Fred Goodwin saw his pay package rise 5.0 per cent to 4.2 million pounds in 2007, despite billions in losses from the credit crunch.

To applause, Mr Steen told the meeting: 'You guys are paid as though you were superhuman and it's very clear that you're not.'

The rights issue - and possible disposals from its insurance sector arm that could generate four billion pounds of extra cash - are an embarrassment for Mr Goodwin.

He was still insisting, as late as February, that the bank was adequately capitalised and had explicitly stated at the time of the ABN Amro takeover that a rights issue to raise fresh funds was out of the question.

Some investors took him to task at the time of the deal for biting off more than he could chew by getting involved in a contest for the Dutch bank with rivals Barclays.

Mr McKillop and the board gave Goodwin their full support Tuesday amid calls for the chief executive to stand down.

Mr Goodwin has been at the helm of RBS since 1998 and oversaw the acquisition of the NatWest bank in 2000, a masterstroke that propelled the Edinburgh-based lender into the upper echelons of world finance.

Despite their criticisms, RBS shareholders did not call for a vote on the rights issue Wednesday or on Mr Goodwin's future as the meeting had been planned for some time.

They will decide on the rights issue at an extraordinary general meeting in mid-May. -- AFP