HBOS gets 8% takeup for rights issue

British bank HBOS said shareholders subscribed for just 8

British bank HBOS said shareholders subscribed for just 8.3 per cent of shares in its £4 billion ($8 billion) rights issue, leaving its underwriters to try to sell almost £3.8 billion of stock.

HBOS - seeking to repair its balance sheet from the capital raising - said today that shareholders subscribed to buy 124 million shares in the rights issue. This left underwriters Morgan Stanley and Dresdner Kleinwort with 1.375 billion shares.

HBOS offered its shares at 275 pence each in the issue, but its share price fell below that level in the days before the offer deadline.

They rallied to close on Friday at 282p, potentially making it easier to sell the shares left over.

The underwriters have until 15.30pm tomorrow to get subscribers for the shares at 275p or above. If they are unable to do so, they would then buy the shares.

"The rights issue was conducted in the middle of a fierce financial storm, we saw unprecedented volatility in bank stocks," a spokesman for HBOS said.

"The bottom line from an HBOS perspective is we've raised £4 billion of capital, which means we will now be one of the most strongly capitalised banks. That's where we want to be at a time when the economic outlook is darkening," he added.

HBOS expects the fundraising to lift its core tier 1 capital to the "upper end" of its targeted 6-7 per cent range by the end of this year, above most European peers.