Now is Halifax, Bank of Scotland that have admitted running out of dosh... http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3822669.ece HBOS board to consider rights issue
THE board of HBOS will meet tomorrow to decide whether to approve a multi-billion-pound rights issue to repair the bank’s balance sheet.
Lord Stevenson of Coddenham, chairman of the group that includes Halifax, Bank of Scotland, Clerical Medical and Birmingham Midshires, has called the discussions ahead of the bank’s annual shareholder meeting on Tuesday in Glasgow.
The board is being asked to consider raising between £2 billion and £4 billion from investors. It is still possible that the group, which has a market value of £18 billion, could attempt to ride out the credit crisis without raising additional funds.
HBOS has had one of the strongest capital ratios – a measure of a bank’s strength – in the sector. It is still stronger than Royal Bank of Scotland and Barclays, but its ratio remains much below its long-term average.
Andy Hornby, the HBOS chief executive, has also been down-beat about the immediate prospects of the UK economy.
As a result he may want to raise capital to have headroom should the outlook deteriorate. The move follows Royal Bank of Scotland’s £12 billion rights issue announced last week. One analyst said: “RBS was forced to raise money after a mistimed acquisition. With HBOS it’s more about what Hornby thinks about the economy.”
At the annual meeting Hornby is expected to admit the bank has taken a further writedown of up to £3 billion on assets whose value have been eroded by the credit crunch.
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