Bank in £3.26bn cash call
Oct 14 2010 Huddersfield Daily Examiner
ASIAN-focused bank Standard Chartered launched a £3.26bn investor cash call to beef up its balance sheet in the face of tough new global regulations.
The London-listed group said it made the move to ensure it was well-prepared for incoming Basel III rules, which will force banks to more than double their reserves to prevent a repeat of the financial crisis.
Standard Chartered is one of the sector’s strongest banks, but the firm said it was “prudent” to plan for even stricter capital requirements and the possibility they may come in sooner than initially thought.
The rights issue will also mean it does not have to sacrifice growth ambitions to meet Basel III.
Among UK banks, Barclays has already indicated it does not expect to tap shareholders for more cash to bolster its capital strength.
Standard shares fell by 2% or 32.5p to 1876p on the news, with other blue-chip banks following suit.
Barclays dropped about by 2p to 292p while HSBC, Royal Bank of Scotland and Lloyds Banking Group were also lower.
Standard, which does most of its business in Africa, Asia and the Middle East, has already asked investors to stump up cash in recent years, raising £1.8bn at the height of the financial crisis to cushion against economic woes at the time and to pursue acquisitions.
The group fears that if it does not ask for more money now, it may have to restrict its growth plans.