HSBC £12.5 billion rights issue causes shares to fall

HSBC Holdings plc (LON:HSBA) have seen their shares fall by 9.3 per cent this morning, this is a direct result of the banks plans to ask investors for £12.5 billion so that they can strengthen their balance sheet. This cash injection is needed following a 62 per cent fall in profit in 2008.

HSBC shares fell 46p to 445.25p, this fall was also a result of the banks plans to close its US personal finance and mortgage businesses; this will result in the loss of 6,100 jobs. HSBC has said that they plan to raise the money through rights issue. This is where investors will be offered five shares for every twelve that they own at £2.54 each.

HSBC Holdings plc (LON:HSBA) has said that this rights issue will help with its “ability to deal with the impact of an uncertain economic environment and to respond to unforeseen events”. This rights issue is the largest in the UK, this beats the £12 billion rights issue that Royal Bank of Scotland last year.

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