Standard Chartered plans $2.7b rights issue

Singapore/London: Emerging markets bank Standard Chartered plans to raise £1.8 billion (Dh9.91 billion) from a rights issue to boost its capital base and give it flexibility to pursue acquisitions, it said on Monday.

The London-based lender said the economic picture had deteriorated this month and, although the bank was performing well, the outlook was unclear.

The bank's chief executive, Peter Sands, said investors were keen for banks to hold more capital during turbulent market conditions and there was merit in retaining an excess of cash.

The extra funding could also be used for deals, he said. "Having more capital will give us greater flexibility to take advantage of growth opportunities emerging from the turmoil, both organic and inorganic," he said.

"Many of our competitors are in disarray, lacking capital or liquidity or distracted by problems," Sands told reporters.

But concerns over the dilutive impact of the rights issue were sharpened by news of further structured credit losses, and by confirmation that the bank's Korean operations have been hit by a fall in the value of the won, analysts said.

By 1008 GMT on Monday, Standard Chartered's London-listed shares were down 4.2 per cent at 727.5 pence, compared with an issue price of 390 pence for the capital increase.

The cash injection by the bank, which has dodged the massive losses from the credit crisis suffered by some of its competitors, came as some analysts called for it to beef up its capital cushion to withstand potential losses in Asia and the Middle East.