French bank Société Générale today unveiled a rights issue at a steep discount as it aims to raise €5.5 billion to bolster its balance sheet.
The one for four rights issue at €47.50 per share is 38.9 per cent below Friday's closing price and dilutes the share capital by some 20 per cent. The bank's shares fell 6 per cent to €73 today.
SocGen, afflicted by a trading scandal, revealed plans for the capital increase on January 24th when it unveiled €4.9 billion of rogue trading losses. Jerome Kerviel, the trader at the heart of the scandal, was jailed on Friday.
The French bank's losses related to the US subprime crisis totalled €2.6 billion, including €600 million in write-downs that were not previously detailed.
The cash call discount is steeper than some market participants expected, with fund managers reported last week to be seeking a discount up to 30 per cent.
A SocGen official said the discount was designed to guarantee that the rights issue would be a success against the background of the market volatility.