The Royal Bank of Scotland yesterday weathered a final blast of disapproval from small shareholders over its blockbuster £12bn rights issue.

The Royal Bank of Scotland yesterday weathered a final blast of disapproval from small shareholders over its blockbuster £12bn rights issue, as it signalled that the speed and prudence of the move had persuaded large institutional shareholders to back its senior management.

Sir Tom McKillop, chairman, told around 120 shareholders at a special meeting at bank headquarters that the cash-call had been prompted by a "fundamental shift in RBS's financial strategy".

He told one questioner that he hoped the bank's share price would in due course start to reflect "the exciting opportunities ahead of us", and added: "The discount which we perceive has been in the share price of RBS because we were at the bottom end of the capital ratios might very well be corrected, but that is for the market to decide."

Bank sources, meanwhile, were pointing discreetly to the contrast with Barclays, the Royal Bank's beaten rival in last year's ABN Amro bid, which has yet to bring forward a rights issue amid questions over the robustness of its markdowns. "There has been a very strong endorsement of the fact we acted quickly, and at the aggressive level of our writedowns," said one source.

While the two rights issue resolutions won 95%-plus approval yesterday, McKillop was nevertheless challenged more directly than at last month's annual meeting on the issue of his position and that of chief executive Sir Fred Goodwin.

Shareholder Ian Blackley asked: "Should the opportunity of the rights issue be taken for some changes in top management of the bank? There is a problem of both shareholder and market confidence."

McKillop responded: "The board believes we are focused exclusively on the key question, which is what is the right thing to do for shareholder value we believe the right thing going forward is to support the executive management, we believe they have the expertise to deliver."

Shareholder Ian Wood said the bank was raising money to fill the hole it had itself created, yet there appeared to have been "no resignations, no dismissals, no apologies".

McKillop said it was the £4bn the bank hoped to raise from disposals notably RBS Insurance, and, not the £12bn from shareholders, that would fill the hole left by £4.3bn of debt writedowns.

He added that many lessons had been learned, some types of business had been abandoned, and "we have changed a lot of management in the US".

McKillop went on: "I stand here and apologise to every shareholder willingly we in the board are not comfortable to be in the position we are in." But the board had to "back senior management in guiding the ABN Amro integration and realising the many opportunities before us".

On the £246m costs of the rights issue, shareholder Michael Dixon asked why the fees to the underwriting banks, Goldman Sachs, Merrill Lynch and UBS, were so large.

"The principal is a deeply- discounted issue with minimal fees or a shallow discount with high fees, but in this case the underwriters seem to be getting the best of both worlds," he said.

The chairman responded that there had been "a proper level of negotiation".

Fred Lawson, a thorn in the bank's side at the annual meeting, said executives had still received huge bonuses in a year when the shares had crashed by 60%.

"Shareholders are perfectly happy to share with executives, and all the way down the tree, when things are good, but bonuses should be a bonus for good performance not a reward for failure."

McKillop said: "I would point out that one component of the remuneration for executives is the long-term element, and that has not paid out because value was not added."