HBOS may announce rights issue

28-04-2008

HBOS may announce rights issue
The board of HBOS is meeting to consider a £4 billion rights issue before its annual general meeting (AGM) tomorrow.

Reports in the Sunday Telegraph suggest the bank could announce a £3 billion write down following severe losses over the year, although the board could opt to sit out the credit crunch without seeking additional funds.

The move follows the Royal Bank of Scotland's (RBS) decision to seek up to £12 billion from investors last week.

HBOS has already been forced to deny it was to seek additional funding.

In March the company – which is Britain's biggest mortgage lender – issued a denial as false rumours spread through the City claiming it was facing a funding crisis.

In response the Financial Services Authority (FSA) and the Bank of England launched an unprecedented intervention scotching the rumours.

However, shares in the organisation still tumbled 17 per cent at the peak of the crisis.

The company's chairman, Lord Stevenson, and the chief executive, Andy Hornby are expected to take the decision today, ahead of tomorrow's meeting in Glasgow.

Yet, the case does not appear as pressing at the situation at RBS.

HBOS has a core tier-one equity ratio of 5.7 per cent, significantly above the equivalent figure of 5.1 per cent at Barclays, which recently ruled out a rights issue.

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