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HSBC confirms successful £12 billion rights issue

Just a couple of weeks ago it seemed as though HSBC may struggle to raise the £12 billion it needed to shore up its balance sheet. However, in light of a significant change in sentiment towards the UK banking sector the company has revealed a strong take-up with a figure of around 96.6% said to have taken up their entitlement in full. The remaining 3.4% of the new shares to be issued will be placed in institutional hands in the short term.

This is something of a coup for HSBC as the banking sector had been struggling when the company first suggested going ahead with the largest rights issues in UK history. The move had attracted a number of critics but it appears HSBC has managed to stay out of the clutches of the UK government, much like Barclays bank just a few days ago. Whether this is a significant turnaround in the sector remains to be seen but there is no doubt that sentiment has changed somewhat in the short term although how far this will go remains to be seen.

The company will now be able to strengthen its core tier 1 capital ratio which is vital if the bank is able to build and expand into the future.

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