HBOS shares climb, but still below rights issue price

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Shares in HBOS, the Halifax Bank of Scotland, are recovering on the FTSE today after shock falls yesterday saw the share price fall below the rights issue price.

Share prices on June 11th had fallen to 258 pence per share, 17 pence below the rights issue price of 275.

However, HBOS shares have already recovered over 5% this morning and are currently trading at 272.5, only slightly below the rights issue price.

The HBOS rights issue aims to generate an extra £4 billion to the bank to help shore up its balance sheets against any possible future shocks caused by the Credit Crunch.

In the event that the bank’s shares remained below rights issue price, underwriters Morgan Stanley and Kleinwort Dresdner would be left holding the unsold shares, potentially compounding their own balance sheets.

However, with HBOS shares at an historical low, in the longer term the shares may well present an excellent bargain once the short-term volatility is cleared.


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