U.K. -based Standard Chartered PLC plans to raise up to £3.26 billion, or about $5.2 billion, in a rights issue that will bolster the company's capital position.
The bank will offer one share for every eight shares at a price of £12.80 each, or $156.82 Hong Kong dollars a share, for Hong Kong shareholders, according to a company statement. The share price in the offering includes a 33% discount to the bank's closing share price in London on Tuesday of £19.085. The discount is a little lower at 32% for the Hong Kong investors as it closed HK$230 on Tuesday.
The bank is planning to raise capital as financial institutions in Europe struggle to comply with the Basel III capital rules that require the internationally active banks to hold capital equal to at least 7% of their assets. This ratio is significantly higher than the current benchmarks but banks have until 2019 to comply with these rules although the regulations will start taking effect in 2013.
The bank is expecting an increase of up to 2% in its Core Tier 1 capital from a ratio of 9% as of June 30.
The rights issue is fully underwritten by J.P. Morgan Cazenove, Goldman Sachs International and UBS Investment Bank. Singapore's Temasek Holdings, which is the largest shareholder with 18% stake, will take up on the offer. The bank earns up to 90% of its revenues from Asian and Middle Eastern Markets and has also made inroads into the emerging markets of Africa.
