David Prosser: The bank doth not protest too much


Outlook Standard Chartered's insistence yesterday that its £3.5bn rights issue has been launched primarily with the more stringent capital requirements of Basel III in mind was met with some scepticism in the market. After all, the bank raised £1bn in August 2009 and its Tier One capital ratio, at 9 per cent, is comfortably ahead of the 7 per cent required under Basel III. Might the cash call have more to do with amassing funds for acquisitions, some analysts wondered?

Well, maybe. No doubt Standard Chartered would be happier if it felt it had sufficient firepower to take advantage of any opportunities that come along, particularly since it is coming under greater pressure in many of its emerging markets strongholds – from HSBC in Africa, for example.

Still, it is perfectly credible that Standard Chartered's fund-raising genuinely does reflect an anxiety to get in first in what could turn out to be a battle of the banks to secure additional funding.

Although it is fair to say the Basel III agreement was not universally seen as as being heavy-handed on the banks, the headline rule changes do not reflect its challenges. That 7 per cent basic requirement might actually rise as high as 13 per cent during peaks of the economic cycle. And though the banks have eight years to put their house in order, many national regulators, including the Financial Services Authority in the UK, are pushing for speedier compliance.

Then there is the issue of risk-weighted assets. A bank's tier one capital ratio is its total capital divided by its risk-weighted assets. So if, as is expected once the final version of the Basel III rules are agreed, the definition of what counts as risk-weighted assets is widened, banks' current tier one ratios will fall.

Several analysts have published forecasts of how this might affect the larger banks. In each case, Standard Chartered falls into the middle of the pack. On that basis, the bank may well have concluded that if it is going to need additional capital for the sake of comfort, many others will be in the same boat. This cash call may be a case of buy now, while stocks last.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before