HSBC profit down 62%; £12.5bn rights issue announced
by Gill Montia
HSBC has reported a 62% fall in profit for 2008, to $9.3 billion (£6.5 billion).
Europe’s biggest bank said it has written down $10.6 billion from its operations in the US where it will be closing its consumer credit businesses, Household Finance Corporation (HFC) and Beneficial.
HFC, which cost HSBC around $14 billion in 2003, has posted losses of $15.5 billion.
HSBC has also confirmed that it is embarking on a £12.5 billion rights issue and will therefore be stealing the record for the UK’s largest corporate fundraising from Royal Bank of Scotland, which raised £12 billion in June of last year.
Existing investors will be offered five shares for every twelve held at a price of £2.54 or a 48% discount on last week’s closing price.
According to chairman, Stephen Green, the additional capital will enable the bank “to deal with the impact of an uncertain economic environment and to respond to unforeseen events”.
It is also understood that some of the money may be used to buy assets that are being shed by failing financial institutions worldwide.
The group has confirmed that its operations in Europe, Asia and Latin America were profit making during 2008 and that none of its board directors will receive a cash bonus in 2009.
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