9:34 PM
By Saeed Azhar and Denny Thomas
SINGAPORE/HONG KONG | Wed Oct 13, 2010 12:23am EDT
SINGAPORE/HONG KONG (Reuters) - Emerging markets bank Standard Chartered (STAN.L) plans to raise as much as $11 billion through a rights issue to strengthen its finances ahead of the introduction of new global capital rules, the Financial Times reported on Wednesday.
Regulators, seeking to prevent the repeat of the global credit crisis, agreed last month to force banks to increase the amount of top-quality capital which they must hold in reserve. Deutsche Bank (DBKGn.DE) kicked off a post-Basel III round of capital hikes earlier this month, raising 10.2 billion euros ($14.2 billion), in part to meet the new bank capital rules.
StanChart's Hong Kong-listed shares (2888.HK) were suspended from trade pending an announcement relating to a corporate action, the Hong Kong stock exchange said. Trading will resume on Wednesday afternoon.
A StanChart spokeswoman in Hong Kong declined to comment, while officials in London and Singapore were not immediately available for comment.
The UK-based bank could announce plans to raise 5-7 billion pounds ($7.9-$11 billion) as early as this week, the newspaper said, citing people close to the cash call.
A source familiar with the deal said Singapore state investor Temasek TEM.UL, StanChart's biggest shareholder, will support the rights issue.
The size of the rights issue was smaller than that reported by the FT, the source said, without providing further details.
A spokesman for Temasek, which owns about 18 percent of the bank as of March 2010 according to Thomson Reuters data, declined to comment.
Standard Chartered last raised about 1.8 billion pounds in a rights issue late 2008. JPMorgan (JPM.N), Goldman Sachs (GS.N) and UBS (UBSN.VX) had handled the sale then.
CAPITAL RULES
Some banks believe that to maintain a reputation for financial strength, they need to pre-empt the full impact of the new Basel III rules, which will be introduced gradually by 2019 and will redefine how the ratios are calculated.
StanChart reported a core tier one capital ratio of 9 percent on June 30, comfortably above the new requirement of 7 percent.
However, under the new Basel rules the definition of core tier one will be tightened so that common equity and retained earnings must make up the bulk of a bank's capital base. This means many banks' core tier one capital ratios will be substantially lower under the new rules than they are at present.
"Basel regulations will be difficult for some Western banks and they want to jump ahead of the line in raising capital before some of the European banks do that," CLSA analyst Daniel Tabbush said. "It could be the case that Basel regulations penalize more so banks like Standard Chartered and HSBC (HSBA.L) (0005.HK) within Asia, as they are more cross-border."
ACTIVE IN UNDERWRITING
Posts
