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Royal Bank of Scotland faces immediate refinancing issues

Despite the fact that Royal Bank of Scotland has been bailed out by UK taxpayers it has been revealed that around £400 billion of short-term debt will need to be refinanced within the next 12 months. However, it is the £300 billion of short-term debt which is due for refinancing over the next four weeks which is causing some concern amongst stock market analysts.

In traditional money markets, a refinancing of this size would be no problem but even though there has been some recovery in the worldwide money market they are nowhere near their levels of just 18 months ago. As a consequence, assuming that Royal Bank of Scotland is able to refinance the massive figure, it is highly likely there will be a significant increase in the cost of debt. This will not only impact upon the short to medium term returns for the company but could impact upon the financial strength of the operation.

When you consider that the Bank of England already believes that UK banks may need further capital injections, the future could be very volatile indeed for the Royal Bank of Scotland share price. As ever, worldwide money markets hold the key to the recovery of the worldwide economy and national economies such as the UK, US and Europe.

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