HSBC announces £12.5 billion rights issue
One of the strongest banking companies in the world, HSBC, has today been forced to go cap in hand to investors for an additional £12.5 billion after announcing a rights issue. The heavily discounted rights issue is vital to enable the other company to increase its Tier 1 capital ratio after taking a severe hit from its US operations. However, unlike Royal Bank of Scotland which had been criticised from day one for a number of the US and other overseas acquisitions, the HSBC acquisition of Household International had been well-received at the time.
The situation today is very different with the company having to write off billions of pounds on its US operation. HSBC is now in the process of winding down the Household International operation which could see a significant jump in costs and write-offs, which has caused uncertainty in the market place. However, on the whole HSBC is in a far stronger position than many of its international competitors who are struggling on more fronts than the former Hong Kong Shanghai Banking Corporation.
While analysts expect short-term fluctuations in the share price it appears as though the rights issue, assuming there are no more serious market surprises, should be successful but nothing is ever guaranteed in the current market environment.
Share this..
Related stories
Are we moving towards a credit crunch part two?
As the cost of borrowing continues to move higher and higher in international money markets, due to sovereign debt concerns within Europe, friction between North and South Korea and the general malaise in worldwide stock markets there is concern we could be heading towards a credit crunch part two. The cost of finance is vital to the successful recovery of the worldwide stock economy and local eco...
Read MoreIs George Osborne heading down the Irish route?
News that the Irish credit rating has been reduced by Moody's was not necessarily a surprise to investors but it does place the UK economy on a similar path. Despite the fact that the Irish authorities introduced various austerity measures some time ago the financial structure of the Irish setup has been weakened, hence the reduction in the credit rating. So is the UK really on a similar path?...
Read MoreFSA step into short selling saga
The Financial Services Authority (FSA) has today indicated they are willing to look at an extension of the ban on short selling which could incorporate all shares on the UK market. The blanket ban on short selling is seen by many as a knee-jerk reaction and the result of a witch-hunt against investors and investment companies in the city. What exactly will a short selling ban achieve?
Read More
CML cuts repossession forecast
The Council of Mortgage Lenders (CML) has today adjusted its forecast for the total number of housing repossessions in the UK for 2009 to 48,000. This further adjustment is a startling difference to the 75,000 which the CML forecast for 2009 back in mid-2008, when the market was in trouble. Indeed, the CML gave an indication it actually thought, at the time, the figure could be substantially high...
Read MoreMobile users waste free minutes
Brits with mobile phones waste over 100 inclusive minutes every month, according to uSwitch.Although two-thirds of contract-holders receive an average of 257 peak and 257 off-peak minutes included in their monthly charges, only two of the six main service providers offer a rollover system.The average monthly contract also includes 299 peak texts and 244 off-peak texts, yet 73 of these are unused b...
Read More