HSBC in £12bn rights issue

HSBC, Europe’s largest bank, confirmed today that it is seeking to raise £12.5bn from shareholders though a new rights issue.

The bank’s chairman Stephen Green said that the cash raise would help it deal with the impact of an uncertain economic environment.

The announcement was made as HSBC revealed pre-tax profits for 2008 had dropped a dramatic 62% to £6.5bn
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The bank, which has not sought any financial help from the Government, has been hit by losses in the US sub-prime mortgage market.

In North America, HSBC reported a loss of $15.5bn and said it planned to close the majority of its consumer lending business in the US.

Michael Geoghegan, group chief executive, said: “2008 was a very difficult year for the financial sector, and 2009 will be no less so, as the global downturn intensifies.”

The bank admitted the banking industry had done many things wrong adding that  inappropriate products were sold inappropriately by many.