Standard Chartered announces £3.3bn cash call

| October 13, 2010 | 0 Comments

London-based emerging markets bank, Standard Chartered, has today announced plans to tap investors for £3.3 billion by selling fresh shares in the banking group.

The cash call, which represents the biggest for the bank, comes after new Basel III regulations, which agreed how much equity banks must hold in reserve in order to prevent another financial crisis.

The bank, which recently posted a 10% increase in profits for the half-year ending June 30, has weathered the downturn better than many of its rivals due to strong capital and liquidity.

However, the bank, which has a strong presence in Asia, recently cautioned that these remain challenging times and there is fragility in the global economy and nervousness in financial markets.

It has, though, a 9% core tier one capital ratio and this is higher than the Basel III rules which agreed banks need to look to capitalise around 7%.

A rights issue of £3.3 billion would, therefore, lift the bank’s core capital to around 10.5%.

Meanwhile, there has been speculation that rivals are interested in the bank and shares rose 2% amid rumours that JP Morgan was eyeing up the bank.

However, chief executive Peter Sands, rejected the suggestions and said the cash call means it “can continue our strong record of organic growth and take full advantage of these opportunities, while at the same time being prepared for likely increases in capital requirements resulting from Basel III.”

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