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Just a few days ago the main powerhouses behind the EU met to discuss a joint effort to bolster the European economy and pull the EU from the brink of financial collapse. They all shook hands,...
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Monday 21st July 2008
While the market was braced for bad news from the HBOS fund raising take-up, the final figure of 8.29% was worse than even the most pessimistic of investors had envisaged. The move leaves over £3.6 billion worth of shares in the hands of the underwriters and leaves the share price in a terrible predicament. Indeed there are already rumours in the market that 25% of the under writing stock has already been dumped or been put up for sale.
On the bright side, HBOS has managed to raise the £4 billion it needed to survive but at what cost to the company’s long term reputation in the city?
Underwriters and brokers have very long memories and they will not be in the mood to help the management which has left them with a massive exposure to sector which is still very much in trouble. It will be interesting to see how the likes of Morgan Stanley and Dresdner Kleinwort react over the coming weeks and if the rest of the banking sector is affected in some way.
Under writing can be a dangerous game but in times of stable markets it can often be money for nothing with large commissions for taking the risk of being left with stock which would normally be taken up. However, the last few months have been a little different in that sense! |
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