Tony Tan, the deputy chairman of the Government of Singapore Investment Corporation (the sovereign wealth fund which has invested some $18bn in the likes of Citi and UBS), told employees this week that 'we could be facing a recession which is longer and deeper and wider than any recession we have encountered in the last 30 years'.

Tan said that 'you cannot rule out the possibility of an operating environment for banks taking a sharp turn for the worse'.

The Wall Street Journal reports that Citigroup has bolstered its balance sheet by selling $6bn of perpetual hybrid bonds. In the meantime, Oppenheimer analyst Meredith Whitney has said that the firm may cut its dividend for the second time this year, saying that 'the company has seriously constrained earnings power'.

The newspaper also reports that Royal Bank of Scotland (RBS) confirmed Tuesday that it will seek shareholder approval for a $24bn rights issue to shore up its balance sheet (as wags have said: 'Rights - Said Fred'). The bank said in a statement: 'In the light of developments during March - including the severe and increasing deterioration in credit market conditions, the worsening economic outlook and the increased likelihood that credit markets could remain difficult for some time - the board has concluded that it is now appropriate for RBS to accelerate its plans to increase its capital ratios and to move to a higher target range to reflect the generally weakened business environment'. The bank also said that it will make additional before-tax writedowns of some $12bn.

Bloomberg reports that, according to three unnamed 'people with knowledge of the proposal', RBS 'plans to start a fund to transfer the risk of losses from $2.3bn of high-yield loans'. The bank will pay investors the interest and any capital gains accruing on the loans (after fees), but would look to the investors in the event that the loans continued to lose value.

The news agency also reports that Katsunori Nagayasu, President of Bank of Toyko-Mitsubishi UFJ, has reassured the market about his bank's exposure to subprime loans. He said: 'There will be no surprises. We've checked the underlying loans of our securitized products. We're not panicking'.

The Wall Street Journal reports that Andrew Whittle and Heikki Monkkonen, Barclays Capital's European credit derivatives and credit structuring heads, have both resigned from the firm.

Finally, FT Alphaville reports that, according to new research out by Chicago-based Hedge Fund Research Inc., hedge funds attracted $16.5bn in new capital in the first quarter - the lowest amount since the fourth-quarter 2005.

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