HSBC HAS received overwhelming support for its record-breaking £12.5 billion (€13.7 billion) rights issue, with investors subscribing for almost 97 per cent of the stock on offer.
The offering is the biggest in the UK, eclipsing RBS’s £12 billion issue last year, and underlined the perceived strength of the UK’s largest bank compared with the problems that have weakened its rivals.
The offer’s success was widely expected. Shares in the bank have risen by almost a quarter since the offering was announced early in March.
They closed at 434½p on Friday, compared with a price for the new shares of 254p.
HSBC’s shares are down 49 per cent compared with their level of a year ago, but this is still far less than the 92 per cent fall in RBS’s stock or the 65 per cent slide in Barclays shares.
The 3.4 per cent rump – 173 million shares – of leftover stock is expected to be placed in the market today by the underwriters, led by JPMorgan Cazenove and Goldman Sachs.
The cash raised will be used to strengthen the bank’s capital ratios by about 1.5 percentage points each. Its core equity tier one level will rise to 8.5 per cent and its tier one ratio to 9.8 per cent.
“This underlines our determination that HSBC should maintain its signature financial strength,” said Stephen Green, group chairman of HSBC. We remain confident that HSBC is well placed in today’s environment and that our strength leads to opportunity.”
HSBC reported pre-tax profits of $9.3 billion (€6.9 billion) last year in spite of writing off $10.5 billion of goodwill linked to its US consumer business. However, profits were less than half those of the previous year.
Separately Royal Bank of Scotland is considering whether to appoint Brendan Nelson, one of the City’s most senior auditors, as a non-executive director and head of its audit committee. The two are in talks although it is not yet known whether Mr Nelson would be prepared to leave KPMG, where he heads the global financial services practice.
Earlier this year, RBS announced it would slim down its board and that seven non-executives would retire immediately.
Mr Nelson, a career accountant, is widely respected in the City but has kept a low media profile. – (Copyright The Financial TimesLimited 2009)
