HSBC launches capital increase of 14.2 billion euros

HSBC Capital

- HSBC has launched a capital increase of 12.5 billion pounds (14.2 billion euros) to strengthen its balance sheet, after having published a taxable profit down 62% for 2008.

The industry leader in Europe, which showed a strong increase in bad debts in the United States, will issue 5.06 billion shares at a price of 254 pence, which is the largest capital increase ever in Great Britain.

The price of new shares offer a discount of 48% over the closing price on Friday (491.25 pence).

Many investors had told Reuters last week that they favored such an operation and they wanted a quick decision of management to cut short the uncertainties on the stock.

"The capital increase is made at a price below market expectations but it is positive for existing shareholders who can maintain their involvement with it," said YK Lee, an analyst at Core Pacific-Yamaichi in Hong Kong.

The British bank reported a taxable income for 2008 down 62% to $ 9.3 billion (7.4 billion) against U.S. $ 24.2 billion a year ago, after taking into account the impact of an impairment charge of $ 10.6 billion in the United States.

His taxable income before depreciation amounted to 19.9 billion dollars for 2008, down 18% compared to 2007. Economists projected a slightly lower profit of 19 billion dollars. ( HSBC Capital )

ACQUISITIONS?

10:40 am GMT, the title HSBC lost 13.7% to 424 pence in London while the sectoral index comprising the European banking values assigned at the same time 7.2%.

The bank has also decreased by 29% dividend for the full year 2008 at $ 0.64 and announced the closure of its business of consumer credit in the United States, which will result in cuts of 6100 jobs. ( HSBC Capital )

The loss of HSBC North America totaled $ 15.5 billion last year, including 10.6 billion impairment. They are due mainly to the acquisition six years ago the American consumer credit Household for $ 14 billion.

"With hindsight, it is an acquisition that we would have preferred not to have done," said Group chairman, Stephen Green, in a statement.

On the scale of the entire group, losses on bad debts jumped 44% over 2007 to reach 24.9 billion dollars.

HSBC is generally considered one of the best capitalized banks in the world and it did not carry out a capital increase when other banks were in desperate need of cash with the worsening crisis.

The CFO of the bank explained that HSBC may wish to finance acquisitions as competitors to challenge the British were forced to withdraw from international markets, especially those who have requested assistance from the State. ( HSBC Capital )

"We must position ourselves to both defensively for a period of unrest but also to take advantage of opportunities that may arise," said Douglas Flint to the press. "There is no current project but we believe that opportunities will arise for banks that have an understanding of such options."