Police are considering launching a probe into the Royal Bank of Scotland's £12 billion rights issue.

SNP MSP Christine Grahame has written to Lothian & Borders Police, asking them to investigate whether shareholders were misled.

Her call comes days after the bank - which has its headquarters in Edinburgh - revealed it was on course for the biggest loss in UK corporate history as it expected to write down as much as £20 billion on the falling value of its assets.

On Sunday, Ms Grahame argued that the state of the bank's finances should have been known at the time of the rights issue last April.

She alleged: "If you are misleading people into thinking this is a stable investment, when at that stage it must be known the state of the bank's stock, if you are doing that, it's a criminal offence."

Ms Grahame has also written to Scotland's top law officer, Lord Advocate Elish Angiolini, with the allegation.

Meanwhile, Scottish Liberal Democrat leader Tavish Scott has called for the Serious Fraud Office to hold their own investigation.

An RBS spokesman declined to comment.