Better late than never

24 November 2008 By George Hay Follow @gfhay

Like its Spanish peer, the UKlisted bank is raising equity just weeks after implying it wouldn t. That will dent some egos. But StanChart is doing so off its own bat and has solid liquidity. Investors now have to hope £1.8bn is a sufficient buffer against Asia unravelling.

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Standard Chartered is to raise £1.8bn via a rights issue, the bank revealed on November 24.

The rights issue, which the bank says "reflects the shift in investors expectations to higher capital levels", will protect shareholder's preemption rights and see them receive 30 new ordinary shares at 390p for every 91 they already own. This represents a 41% discount to the theoretical exrights price of 667p.

The bank said net interest margins across the business remained broadly stable. It added that it was reclassifying $8.3bn of illiquid assets from its trading book to its heldtomaturity book, using recent amendments to IAS 39 accounting standards.

Standard Chartered shares fell 5.5% to 716p in morning trading as the shares readjusted to the theoretical exrights price.

Mervyn Davies, chairman of Standard Chartered, is a nonexecutive director with Breakingviews.

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