Standard Chartered Plc’s 3.3 billion-pound ($5.2 billion) rights offer may mark the start of a rush among European banks to raise more capital than the minimum required by international regulators under Basel III.
The share sale will increase the British lender’s Core Tier 1 capital ratio, a measure of financial strength, by two percentage points to more than 10 percent, Chief Executive Officer Peter Sands said on a conference call today. Banks must have a ratio of at least 7 percent under the new capital rules.
“This move will put other, larger banks under pressure to raise capital,” said Andrew Lim, a London-based analyst at Matrix Corporate Capital LLP with a “buy” rating on Standard Chartered. It “is the first bank to raise money for regulatory purposes. Standard Chartered therefore marks the beginning of the race to improve ratios.”
Lenders are raising surplus capital as their regulators weigh whether to force the largest banks to hold more capital than the minimum agreed by international regulators in Basel last month. Deutsche Bank AG, Germany’s largest lender, raised 10.2 billion euros ($14.2 billion) on Oct. 6. Spain’s Banco Bilbao Vizcaya Argentaria SA, Banco Santander SA and Italy’s UniCredit SpA are among firms most likely to follow, Lim said.
Shareholders will be offered one new share at 1,280 pence for every eight they already own, the London-based bank said. That’s a third less than yesterday’s closing price. Temasek Holdings Pte, Standard Chartered’s largest shareholder with a 17.7 percent stake, will subscribe to its portion of the sale.
Shares Drop
Standard Chartered was down 2.8 percent at 1,856 pence at 2:35 p.m. in London trading. The stock has gained 18 percent this year, beating the FTSE 100 Index’s 6 percent gain.
Some countries and policy makers are urging standards above the Basel III minimum for the world’s largest lenders. A Swiss government-appointed panel last week proposed the first capital surcharge on too-big-to-fail banks, saying UBS AG and Credit Suisse Group AG need to hold almost double the capital required under Basel III rules.
The offering is a “pre-emptive strike,” said Richard Hunter, head of equities at Hargreaves Lansdown Plc, a Bristol, England-based stockbroker. “Barclays is potentially being seen as the next one who might need to make a similar announcement to improve their capital buffer.”
Barclays CEO-designate Robert Diamond said on Sept. 29 that while Basel III rules will affect the bank’s ability to generate earnings, it won’t need additional funding from shareholders.
Barclays Drops
“We have enough equity capital and it is not our objective to turn to shareholders for more,” Diamond told a conference.
Barclays fell 0.6 percent to 292.85 pence. Royal Bank of Scotland Group Plc was up 0.7 percent at 47.94 pence, while Lloyds Banking Group Plc climbed 0.6 percent to 73.07 pence.
“We would be nervous of anyone claiming that RBS and Lloyds will have excess capital in two years time,” Bruce Packard, a London-based bank analyst at Seymour Pierce, wrote in a note to clients today.
RBS had a Core Tier 1 ratio of 8.5 percent at the end of June compared with 9 percent for Lloyds. Barclays had a Core Tier 1 ratio of 10 percent.
Standard Chartered’s offering will enable the bank to increase lending and so-called risk-weighted assets, while maintaining sufficient capital under future regulation, the bank said. RBS and Lloyds, 83 percent and 41 percent government-owned respectively, plan to instead shrink their balance sheets.
‘Not a War Chest’
“This is not a war chest for acquisitions,” Chief Executive Officer Peter Sands, 48, said on a conference call today. “This is a strategy primarily for organic growth.” He didn’t rule out “smaller, bolt-on acquisitions.”
Standard Chartered said in a separate statement that it had “record levels of income and profits to the end of September.” Revenue in the third quarter was above the first half run-rate, the lender said. The bank posted a record first-half profit of $2.15 billion in 2010 as provisions for bad loans fell.
Temasek, Singapore’s state-owned investment company, invested in Standard Chartered’s 1.8 billion-pound rights offer in December 2008, three months after the collapse of Lehman Brothers Holdings Inc. sparked a global financial panic. Unlike U.K. rivals like RBS, Standard Chartered didn’t require a government bailout.
Aberdeen Asset Management
Aberdeen Asset Management Plc, Standard Chartered’s third- biggest investor according to Bloomberg data, is likely to exercise its right to buy stock in the sale, subject to a final meeting with management, said James Laing, deputy head of U.K. and European equities at the U.K.’s biggest independent fund manager.
“Standard Chartered is a prudently run bank wanting to improve its strong capital position to continue with strong organic growth in Asia,” he said in a telephone interview.
JPMorgan Cazenove, Goldman Sachs Group Inc. and UBS AG are managing the share sale. Fees paid to the firms arranging the sale will total more than $100 million, Finance Director Richard Meddings said on the conference call today.
http://jodnet.blogspot.com
The share sale will increase the British lender’s Core Tier 1 capital ratio, a measure of financial strength, by two percentage points to more than 10 percent, Chief Executive Officer Peter Sands said on a conference call today. Banks must have a ratio of at least 7 percent under the new capital rules.
“This move will put other, larger banks under pressure to raise capital,” said Andrew Lim, a London-based analyst at Matrix Corporate Capital LLP with a “buy” rating on Standard Chartered. It “is the first bank to raise money for regulatory purposes. Standard Chartered therefore marks the beginning of the race to improve ratios.”
Lenders are raising surplus capital as their regulators weigh whether to force the largest banks to hold more capital than the minimum agreed by international regulators in Basel last month. Deutsche Bank AG, Germany’s largest lender, raised 10.2 billion euros ($14.2 billion) on Oct. 6. Spain’s Banco Bilbao Vizcaya Argentaria SA, Banco Santander SA and Italy’s UniCredit SpA are among firms most likely to follow, Lim said.
Shareholders will be offered one new share at 1,280 pence for every eight they already own, the London-based bank said. That’s a third less than yesterday’s closing price. Temasek Holdings Pte, Standard Chartered’s largest shareholder with a 17.7 percent stake, will subscribe to its portion of the sale.
Shares Drop
Standard Chartered was down 2.8 percent at 1,856 pence at 2:35 p.m. in London trading. The stock has gained 18 percent this year, beating the FTSE 100 Index’s 6 percent gain.
Some countries and policy makers are urging standards above the Basel III minimum for the world’s largest lenders. A Swiss government-appointed panel last week proposed the first capital surcharge on too-big-to-fail banks, saying UBS AG and Credit Suisse Group AG need to hold almost double the capital required under Basel III rules.
The offering is a “pre-emptive strike,” said Richard Hunter, head of equities at Hargreaves Lansdown Plc, a Bristol, England-based stockbroker. “Barclays is potentially being seen as the next one who might need to make a similar announcement to improve their capital buffer.”
Barclays CEO-designate Robert Diamond said on Sept. 29 that while Basel III rules will affect the bank’s ability to generate earnings, it won’t need additional funding from shareholders.
Barclays Drops
“We have enough equity capital and it is not our objective to turn to shareholders for more,” Diamond told a conference.
Barclays fell 0.6 percent to 292.85 pence. Royal Bank of Scotland Group Plc was up 0.7 percent at 47.94 pence, while Lloyds Banking Group Plc climbed 0.6 percent to 73.07 pence.
“We would be nervous of anyone claiming that RBS and Lloyds will have excess capital in two years time,” Bruce Packard, a London-based bank analyst at Seymour Pierce, wrote in a note to clients today.
RBS had a Core Tier 1 ratio of 8.5 percent at the end of June compared with 9 percent for Lloyds. Barclays had a Core Tier 1 ratio of 10 percent.
Standard Chartered’s offering will enable the bank to increase lending and so-called risk-weighted assets, while maintaining sufficient capital under future regulation, the bank said. RBS and Lloyds, 83 percent and 41 percent government-owned respectively, plan to instead shrink their balance sheets.
‘Not a War Chest’
“This is not a war chest for acquisitions,” Chief Executive Officer Peter Sands, 48, said on a conference call today. “This is a strategy primarily for organic growth.” He didn’t rule out “smaller, bolt-on acquisitions.”
Standard Chartered said in a separate statement that it had “record levels of income and profits to the end of September.” Revenue in the third quarter was above the first half run-rate, the lender said. The bank posted a record first-half profit of $2.15 billion in 2010 as provisions for bad loans fell.
Temasek, Singapore’s state-owned investment company, invested in Standard Chartered’s 1.8 billion-pound rights offer in December 2008, three months after the collapse of Lehman Brothers Holdings Inc. sparked a global financial panic. Unlike U.K. rivals like RBS, Standard Chartered didn’t require a government bailout.
Aberdeen Asset Management
Aberdeen Asset Management Plc, Standard Chartered’s third- biggest investor according to Bloomberg data, is likely to exercise its right to buy stock in the sale, subject to a final meeting with management, said James Laing, deputy head of U.K. and European equities at the U.K.’s biggest independent fund manager.
“Standard Chartered is a prudently run bank wanting to improve its strong capital position to continue with strong organic growth in Asia,” he said in a telephone interview.
JPMorgan Cazenove, Goldman Sachs Group Inc. and UBS AG are managing the share sale. Fees paid to the firms arranging the sale will total more than $100 million, Finance Director Richard Meddings said on the conference call today.
http://jodnet.blogspot.com
0 التعليقات
Post a Comment