HSBC in $18 billion rights issue

LONDON - HSBC launched Britain's biggest rights issue on Monday, to raise 12.85 billion pounds to help it overcome big losses in the United States and exploit the woes of weaker rivals.

 

Europe's biggest bank said it would shut most of its U.S. consumer lending business, cutting 6,100 jobs, but that it was ready for acquisitions in its traditional stronghold of Asia where many banks are pulling out to focus on their core markets.

 

HSBC said it would sell 5.1 billion shares at 254 pence each which is a 48 percent discount to Friday's close.

 

Shares in the bank were down 20 percent at 395p by 11:11 a.m. British time, but they were still comfortably above the 254p issue price. HSBC's Hong Kong-listed shares were suspended.

 

"It's always difficult for a market that's feeling jittery to absorb 12.5 billion of new stock," said Jane Coffey, head of equities at Royal London Asset Management which is HSBC's 24th largest shareholder according to Thomson Reuters data.

 

"I am not surprised the stock is down but they are doing the right thing and we are going to support the issue."

 

The stock has halved in value since Lehman Brothers collapsed in September but HSBC's relative resilience to the global financial crisis means it has outperformed European peers which have lost almost two-thirds of their value.

 

Its share price fall ranked it as the world's fourth-biggest bank, just behind JP Morgan Chase, with a market value of just over $70 billion (49 billion pounds).