Standard Chartered, the emerging markets bank, yesterday unveiled a £3.3bn rights issue net of fees to meet regulators' demands that banks hold more capital. The move immediately sparked speculation that Barclays could be next, with its shares falling 2.75p at 292p as a result.
Standard's cash call will see shareholders given the right to buy one new share for every eight held at 1,280p. That is a 32 per cent discount to the bank's closing share price on Tuesday. As ever, the move will provide a bonanza for investment banks with fees, including underwriters JP Morgan, Goldman Sachs and UBS. They will take take $100m (£63m).
Richard Meddings, Standard's finance director, said the bank was only "just above" the minimum demanded by the recently agreed Basle III accords, designed to ensure banks are better able to withstand financial shocks. Mr Meddings said the bank wanted to "protect our ability to grow" ahead of the new capital requirements coming in.
With national regulators given charge over extras beyond Basle, such as a capital buffer to be built up in good times and a charge for "systemically important" banks, he said the rights issue should ensure Standard would be comfortably above the new minimum levels and could continue to grow. It is the second cash call by Standard in the last two years, but Mr Meddings pointed to several years of "record profits" and the bank's position in growth markets in Asia. These have prompted much-derided internet takeover rumours. The company also issued a third-quarter trading statement saying performance had been "very strong". The shares closed down 32.5p at 1,876p.