Just 8% take up rights issue at HBOS

It has been confirmed this morning that only 8.29% of shareholders of HBOS have signed up to the £4 billion rights issue.

This amount was marginally worse than the market was expecting after Sunday papers suggested yesterday that the amount was a little as 10%.

HBOS, which is the UK’s largest mortgage lender, will still receive the £4 billion it requires as the unsold stock worth £3.5 billion will be bought by the issue’s underwriters, investment banks Dresdner Kleinwort and Morgan Stanley.

The investment banks have just two days to offload the shares before they have to buy the shares themselves. However, it is believed that Dresdner and Morgan will have taken out insurance against being left holding so much unwanted stock.

When HBOS first announced its intention to raise capital three months ago, its shares were at 550p. Shareholders were offered two new shares at the then heavily-discounted price of 275p for every five shares they already owned.

Since the rights issue was announced, there have been further concerns about the property market and fears regarding further write-downs in the financial sector which has meant banks’ shares have taken a beating of late.

Like many of its rivals, HBOS is asking its shareholders for extra cash as a result of the credit crunch. Royal Bank of Scotland and Bradford & Bingley have both announced fundraising attempts to improve their balance sheets.

Last week, Barclays announced that nearly a fifth of its new shares had been taken up by existing shareholders.

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